Source: Every Day Economic News 2025-09-02 23:45:34

In late August, the exchange rate of the RMB against the US dollar ended its two-month low-wave operation and then appreciated significantly. Today, the RMB rose sharply and then experienced a slight pullback.

The reporter from the Economic Information Daily noticed that the rapid appreciation this time began with the speech made by Federal Reserve Chair Powell at the Jackson Hole Global Central Bank Symposium on August 22.

The determinants of the RMB exchange rate are very complex, including both long-term and fundamental factors as well as short-term and key ones. Wang Qing, chief macro analyst at Orient Jincheng, pointed out that the recent appreciation of the RMB is not only related to the signal of the Federal Reserve cutting interest rates, but also to the strengthening of the domestic stock market and the regulatory role of the RMB's central parity rate.

We believe that maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level remains the core objective of the current policies to stabilize the foreign exchange market. Wang Qing said that the RMB exchange rate will remain stable in the future, and the risks of continuous appreciation or significant depreciation are not high.

After the RMB exchange rate against the US dollar fluctuated in a narrow and low range in June and July, the onshore RMB appreciated rapidly against the US dollar in late August and reached a new high of 7.126 for the year on August 29.

It is worth noting that this rapid appreciation began on August 22nd. The reporter noticed that at that time, Federal Reserve Chair Powell delivered a speech at the Jackson Hole Global Central Bank Symposium, hinting that the Federal Reserve might cut interest rates in September. He mentioned that although inflation remains a concern, risks in the labor market are on the rise. The US dollar weakened due to his remarks.

On August 25th, while the market was bearish on the US dollar and bullish on the RMB, the central parity rate of the RMB exchange rate was adjusted from 7.1321 to 7.1161. This is the first time since November last year that the central parity rate of the RMB exchange rate has been set below 7.12.

Regarding the rapid appreciation of the RMB since late August, Wang Qing told reporters that there are mainly three driving forces: First, Powell's rare signal of cutting interest rates at the Jackson Hole global central bank Symposium put pressure on the US dollar index, which brought passive appreciation momentum to non-US currencies including the RMB. Second, the domestic stock market has been strengthening recently, and foreign capital has been flowing in at an accelerated pace. This not only boosts the demand for foreign exchange settlement but also improves the sentiment in the foreign exchange market. Finally, the recent regulatory effect of the central parity rate of the RMB in a relatively strong direction has been quite obvious.

The team of Ming Ming from CITIC Securities pointed out to reporters that the sharp rise of the RMB exchange rate this round is driven by the resonance of internal and external factors, including the relatively weak operation of the US dollar index creating a relatively mild external environment, the strong signal of exchange rate expectation guidance released by the central bank's central parity rate quote, and the recent outstanding performance of the domestic equity market, which may have attracted foreign capital inflows to a certain extent.

It is worth noting that recently, after the RMB appreciated significantly, discussions about whether its exchange rate against the US dollar could break through "7" have gradually increased.

Regarding the future trend of the RMB, Mingming's team stated that if the RMB exchange rate can maintain a relatively strong fluctuation, it is expected that the related foreign exchange settlement demand will continue to support the RMB exchange rate. However, the current domestic fundamentals play a more stabilizing role for the exchange rate. The equity market is seeing foreign capital inflows, but the bond market is facing certain outflow pressure. It is expected that more catalysis will be needed for the RMB exchange rate to break through "7".

Wang Qing judges that the RMB will remain in a relatively strong operating state in the short term. Next, it is necessary to pay close attention to the trend of the US dollar and the intensity of the regulation of the RMB's central parity rate.

We believe that maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level remains the core objective of the current policies to stabilize the foreign exchange market. Wang Qing pointed out that this means the focus of preventing exchange rate risks in the later stage is to avoid the formation of one-sided expectations in the market, which would cause the RMB exchange rate to fluctuate greatly in a short period of time. At the same time, it is necessary to guide the RMB exchange rate center to make adaptive adjustments in line with changes in the economic fundamentals and release the pressure of appreciation and depreciation in a timely manner.

Wang Qing said that looking ahead, as the Federal Reserve resumes interest rate cuts and the impact of the Trump administration's tariff policies on the US economy gradually becomes apparent, the US dollar index will still face certain downward pressure. However, the US dollar suffered a huge decline in the first half of the year, and it will also have strong resilience against the decline in the later period. Domestically, the impact of external fluctuations on China's exports will gradually become apparent, and the timely intensification of counter-cyclical adjustment policies will ensure the basic stability of economic operation. There is ample policy space in this regard. As a result, the RMB exchange rate will remain stable in the future, and the risks of continuous appreciation or significant depreciation are not high.

Although the current appreciation of the RMB began on August 22nd, the reporter noticed that after the three major RMB exchange rate indices dropped to the lowest point of the year in late June, the intensity of the central parity rate regulation started to increase.

In response, Wang Qing stated that the main objective of intensifying the regulation of the central parity rate is to guide the moderate appreciation of the RMB market exchange rate and stabilize the RMB exchange rate index.

This might be related to the relatively strong domestic economic trend in the first half of the year, the significant decline of the US dollar, and although the exchange rate of the RMB against the US dollar appreciated, it failed to fully match it. This means that the current focus of stabilizing the exchange rate is shifting towards stabilizing RMB exchange rate indices such as CFETS, which is conducive to providing a stable external environment for China's foreign trade enterprises. Wang Qing pointed out.

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