RMB Last Week Rare 2 Consecutive Days Down

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Take a look at the K-line chart of RMB exchange rate reform. Apart from the slight decline in the central parity of RMB against the US dollar during the financial crisis of September 2009, it has been a "slope line" of continuous unilateral appreciation for six years, but last month, the fall in the RMB against the US dollar appeared again.

What's more, last two last week

Driven by the demand for foreign exchange, the spot price of RMB against the US dollar in December 2nd was 6.3627 yuan, which was higher than the closing price of 6.3635 yuan on the previous trading day. However, according to the fluctuation range of 5/1000 of the mid day price, the 6.3627 yuan was the price limit of the renminbi on the same day of December 2nd.

Last Friday, the central parity of RMB against the US dollar was 6.3310.

In the previous day of December 1st, the RMB also had a brief limit to the US dollar.

Looking at the offshore market, the NDF price of RMB against the US dollar has reached 6.3790/40 for one year. Meanwhile, the RMB exchange rate against the US dollar in the domestic market is up to 21 points.

Although the RMB spot market trading for two consecutive days showed a downward trend, but last week, the central parity of RMB against the U.S. dollar is another trend - is still continuing to rise.

Last week, the central parity of RMB against the US dollar rose by 244 basis points.

When the middle price rises and the limit of the RMB intraday, whether this delicate relationship is a temporary situation that the market needs the US dollar urgently, or is the renminbi itself going to depreciate, but the middle price is dying?

The market gives answers?

On November 19th, Premier Wen Jiabao of the State Council, during the East Asian leaders' meeting in Bali Island, Indonesia, said that it was noted that in the late September to early November, the RMB exchange rate devaluation was expected in the offshore non deliverable forward exchange market. This situation was not determined by human beings, but also reflected by the market's exchange rate of RMB.

Wen Jiabao said that increasing the flexibility of the RMB exchange rate means that the RMB can appreciate or depreciate.

On Thursday and Friday, the US dollar was obviously insufficient, pushing the RMB to the US dollar down.

It seems not surprising to some market participants.

A foreign exchange trader of a large bank told reporters: "in fact, there has been a signal of depreciation of RMB in July or so. Now the situation of buying dollars is very strong in the market. The paction price of RMB in two days is obviously deviated from the middle price. It can be seen that the strength of the middle price restraining the depreciation is very obvious."

Liu Dongliang, a senior financial analyst at China Merchants Bank, told reporters yesterday that the reasons for the large purchase of foreign exchange are complex. There may be three reasons: empty renminbi, domestic and foreign arbitrage and hedging needs.

Liu Dongliang's view is that the central bank should be able to control the stability of the Yuan's value, and the central bank's control intention is also very obvious.

Recently, a forecast survey of economists and analysts released by Bloomberg showed that "as China's export surplus continues to decrease, the RMB exchange rate trend will be weak in the next 4 months."

Economists predict that the renminbi will become the weakest currency in BRICs in the next 4 months.

Statistics show that China's trade surplus has dropped to $17 billion in October, compared with $27 billion 200 million in the same period last year.

China's commerce minister recently said that the possibility of a decline in China's trade exports in the coming months will be very strong due to the impact of the European debt crisis.

A large number of market analysts pointed out that if China's trade surplus continues to decline, the external pressure of RMB appreciation will also come to an end.