What does it mean for offshore RMB to fall below the 7.24 mark?

Offshore RMB refers to the deposit business of RMB outside China, and the business where both parties are non-residents is called offshore financial business.

Recently, the offshore RMB has continued to weaken. After falling below 7, it once fell below the 7.24 mark, setting a new low since last year 165438+ 10. At the same time, the onshore RMB exchange rate against the US dollar also approached 7.24.

This means that a lot of money is sold off in RMB, and the outside world is not optimistic about our economic development. At present, our economic growth is slowing down and consumption is sluggish. Everyone is saving money like crazy, not spending.

First, the main reason for the offshore RMB falling to 7.24

The continuous decline of RMB in recent days is closely related to the recent pressure of economic recovery in China, the re-differentiation of monetary policies between China and the United States, and the great market volatility.

1, dollar appreciation

As the main reserve currency in the world, the US dollar index is the anchor of global currency pricing. Judging from the trend of the US dollar index, since May, the US dollar index has shown a rapid upward trend.

As the target of US dollar pricing, it is not surprising that RMB depreciates against the US dollar. As for the reasons for the upward trend of the US dollar index, the resilience of the US economy relative to Europe and Japan has been recognized by the market. Since May, the US non-farm employment data has remained flexible. At the same time, the economic data in the euro zone slowed down, pushing up the US dollar index. The top three currencies in the US dollar index are Euro 57.6%, Yen 13.6% and Pound110.9% respectively, so the comparison of economic strength between the US and Europe will often lead to the fluctuation of the US dollar index.

2. The domestic economic recovery has weakened.

Judging from the recently released economic data of China in April, the recovery momentum showed signs of slowing down compared with 1 quarter, and the market resumed trading in China's "weak recovery". For example, PMI dropped from a high of 52.6 in February to 49.2 in April, and further dropped to 48.8 in May, which increased the pressure of RMB depreciation.

The economic data in May showed that the growth rate of some indicators slowed down or even declined as the base utility subsided. For example, real estate sales weakened to 3% year-on-year, and new construction decreased by 27% year-on-year; Exports fell by 7.5% year-on-year, and the growth momentum of the chain has also weakened.

The spread between China and America has widened.

The interest rate of American debt 10 is rising, while that of Chinese debt 10 is falling. From the data point of view, in recent years, the exchange rate has basically kept pace with the trend of Sino-US 10 US bond yield spread. The widening spread between China and the United States will also strengthen the pressure of RMB depreciation. For enterprises and residents, it is more attractive to convert US dollar deposits into US dollar deposits to obtain higher interest rates than foreign exchange settlement when the interest rate of US dollar deposits is obviously higher than that of RMB.

Concerns about slowing domestic growth and shrinking exports have intensified the pressure on the RMB by raising interest rates in the United States. The continued weakness of the RMB reflects the growing concern about the fundamentals supporting China's economic growth.

Second, what are the effects?

The offshore RMB exchange rate not only reflects the economic fundamentals of China and the United States, but also reflects the market's comprehensive judgment on the global economy, policy trends and risk preferences. In addition, it can also affect the operation of a series of financial markets such as global commodity prices and capital flows.

In fact, the depreciation of the local currency exchange rate is beneficial to exports. Under the background that high-level officials attach importance to economic growth, the continuous decline of RMB exchange rate undoubtedly gives China-made prices an advantage. If devaluation can stimulate exports, this is the real benefit, which is more important than the issue of face.

For the capital market, the depreciation of the exchange rate first constitutes a negative factor, because it means that foreign capital may reduce its holdings of RMB assets.

However, if the devaluation is obvious enough to stimulate economic recovery, it may attract capital inflows.

Therefore, exchange rate depreciation has two sides, which is not only a single influence, but may be biased towards bad news in the short term, but in the long run, we need to consider future economic growth.

To sum up, the decisive factor of exchange rate is ultimately the actual economic growth.

For ordinary people who have no foreign trade, study abroad or travel, the trend of RMB exchange rate has little impact on their lives.

As for whether there are conditions for the continuous depreciation of the RMB, it seems that it is not established at present. At present, there is no systemic risk in China's economy and the political situation is stable. As far as the future trend is concerned, the three major factors that lead to RMB depreciation are also short-term factors, so RMB depreciation is unsustainable.