Exchange Rate Trends - The CNY has recently appreciated against the USD, with the USD index closing at 99.84 on April 23, up 0.61% from the previous week, while the CNY closed at 7.293, up 0.12%[12] - Since Q2 2022, the USD has shown stronger performance compared to other currencies due to expansionary fiscal and industrial policies in the US, exerting depreciation pressure on the CNY[3] US Policy Impact - Trump's recent softening stance on tariffs has alleviated some market concerns, contributing to a slight recovery in the USD index[4] - The USD index has experienced two significant depreciations since March, contrary to actual interest rate trends, indicating heightened global economic risks due to US tariff policies[4] Future Outlook - The CNY's recent recovery may indicate a potential stabilization against the USD, but uncertainties remain due to ongoing US tariff strategies and potential fiscal expansions[5] - The Chinese government has prepared balanced policies to stabilize foreign trade, domestic demand, and exchange rates amid external shocks[5] Monetary Policy Considerations - The People's Bank of China (PBOC) aims to maintain the CNY at a reasonable equilibrium level, with a focus on avoiding excessive depreciation pressures[25] - The MLF net injection in April is projected to reach 500 billion, the highest monthly figure since 2024, indicating a shift in liquidity management strategies[25] Risks - There is a risk that the monetary policy easing may not meet expectations, which could impact the stability of the CNY[6]

Group 1: Economic Factors Supporting Dollar Strength - The scale and diversity of the US economy provide a solid foundation for the strength of the dollar, as the US is the largest economy globally with a GDP that has long been at the top [1] - The resilience of the US economy, characterized by its diverse industrial structure, enhances the stability of the dollar in the face of external shocks [1] Group 2: Financial Market Dynamics - The depth and liquidity of the US financial markets, including stock, bond, and foreign exchange markets, are crucial for the dollar's strength, making it the preferred currency for global investors, especially during market turbulence [3] - The transparency and regulatory framework of the US financial markets increase investor confidence in the dollar [3] Group 3: Monetary and Fiscal Policies - The monetary policy of the Federal Reserve significantly influences the dollar's trajectory, with interest rate adjustments impacting capital flows and dollar demand [3][4] - US fiscal policy, including spending and tax policies, directly affects economic growth and the fiscal situation, which in turn influences the dollar's value [4] Group 4: Innovation and Competitiveness - The US's leadership in technological innovation, supported by top-tier tech companies and research institutions, bolsters the dollar's strength by enhancing economic growth and global competitiveness [4] Group 5: Geopolitical and Military Influence - The military strength and geopolitical influence of the US contribute to the dollar's dominance, as military presence supports strategic interests and enhances the dollar's role in global trade [5] Group 6: Legal and Institutional Framework - The robust legal and institutional environment in the US, including intellectual property protection and market regulation, fosters economic stability and investor trust in the dollar [5] Group 7: Consumer Market Impact - The US consumer market, being the largest globally, plays a vital role in driving global economic growth and influencing the dollar's value through trade dynamics [6] Group 8: Energy Production and Export - The US's position as a leading energy producer and exporter significantly impacts global energy markets and, consequently, the dollar's strength through trade growth [7] Group 9: International Financial Center Status - The US's status as a key international financial center, with major hubs like New York and Chicago, enhances the dollar's credibility and influences global capital flows [8]