张瑜：汇率的叙事——张瑜旬度会议纪要No.129

Core Viewpoint - The article focuses on the recent appreciation of the Renminbi (RMB) and challenges the prevailing narrative that links the Federal Reserve's interest rate cuts to RMB appreciation and subsequent damage to export competitiveness [2][3]. Group 1: Current RMB Exchange Rate Narrative - The popular narrative suggests that the Federal Reserve's likely interest rate cuts will lead to a weaker USD, thus causing the RMB to appreciate and harming China's export competitiveness. This narrative is based on several assumptions that require validation [3]. - The relationship between the Federal Reserve's interest rate cuts and the USD's weakness is not necessarily direct, as historical data shows a low correlation between the two [4]. - The assumption that narrowing interest rate differentials between China and the US will lead to RMB appreciation is flawed, as the correlation between funding rate differentials and the USD/CNY exchange rate is weak [5]. Group 2: RMB Appreciation Analysis - The article divides the RMB appreciation observed this year into two phases: the first phase from mid-April to November, driven primarily by policy support, and the second phase from late November to the present, driven by market supply and demand [9][10]. - In the first phase, the RMB middle rate appreciated from 7.21 to 7.08, largely due to policy interventions, while in the second phase, market dynamics took over, leading to a different adjustment mechanism [14]. - Factors contributing to the recent market-driven appreciation include the release of previously held foreign exchange reserves and seasonal trends in net settlement of foreign exchange by enterprises [16]. Group 3: Future Outlook for RMB Exchange Rate - The article anticipates that the RMB will maintain stable fluctuations against the USD through 2026, with limited potential for significant appreciation [17]. - Current valuation metrics indicate that the RMB is reasonably priced, with deviations from expected levels being minimal [18]. - The central bank's policy appears to be aimed at preventing excessive appreciation of the RMB, as indicated by recent trends in the counter-cyclical factor [22]. - The supply-demand dynamics suggest that while there may be short-term volatility, the underlying support for sustained appreciation is not strong enough at this time [24][27]. - External factors, particularly the USD index, are expected to limit the pressure for a prolonged decline in the USD [28]. - Overall, the RMB's future trajectory will depend on complex factors, with a preference for stable two-way fluctuations rather than significant appreciation [29].