Group 1: Currency Appreciation Dynamics - The current appreciation of the RMB is primarily driven by holders of foreign exchange (cross-border capital, foreign trade enterprises), while domestic investors remain cautious, as evidenced by the high "Shanghai gold premium" [1] - The RMB exchange rate has experienced two phases: the first phase from April to June was characterized by a collapse in USD credit, while the second phase in July and August saw a return to the significance of the USD-CNY interest rate differential [6] - The report highlights a persistent "three-price divergence" among the gold purchasing power parity, offshore price, and central bank's middle rate, indicating differing expectations between foreign and domestic investors [10] Group 2: Investor Behavior and Central Bank Management - Foreign investors are more focused on the volatility of USD assets and investment returns, leading to increased demand for RMB assets during the USD credit deterioration [16] - Domestic investors, who are typically currency exchangers, are more sensitive to USD yields, which explains the high "Shanghai gold premium" during the USD credit collapse [20] - The central bank has successfully managed expectations by adjusting its operations in the swap market and guiding the middle rate, which has led to increased optimism among domestic investors [22] - The report anticipates that the central bank's guidance may lead the offshore price to rise to a range of 7.0-7.1 [22]

Core Viewpoint - The current trend of RMB appreciation is primarily driven by holders of foreign exchange (cross-border capital, foreign trade enterprises), while domestic investors remain relatively cautious, as evidenced by the high "Shanghai gold premium" [1][3]. Group 1: RMB Exchange Rate Dynamics - The RMB exchange rate has experienced two phases: the first phase from April to June was characterized by a collapse in dollar credit, where the US-China interest rate differential had an inverse relationship with the RMB exchange rate; the second phase from July to August saw a return to the significance of the US-China interest rate differential due to expectations of US interest rate cuts [9]. - The RMB exchange rate is currently showing a "three-price divergence," indicating a persistent discrepancy among the "gold purchasing power parity" reflecting domestic expectations, the offshore price reflecting market expectations, and the central bank's middle price reflecting its stance [9]. Group 2: Investor Behavior - Holders of foreign exchange (foreign capital, foreign trade enterprises) are the main drivers of the current RMB appreciation, while currency exchangers (domestic investors) are more cautious about the trend [9]. - Domestic investors, who are currency exchangers, are more concerned with dollar yields and are less sensitive to dollar credit, which is reflected in the high correlation between gold purchasing power parity and US Treasury yields [9]. Group 3: Central Bank's Role - The central bank's management of exchange rate expectations has become crucial, as the pricing logic of the RMB exchange rate is expected to become more complex by 2025, with the US-China interest rate differential no longer being as effective as in previous years [3]. - The central bank has successfully demonstrated expectation management, leading to increased optimism among domestic investors and a breakthrough at the key level of 7.15, with expectations that the offshore price may rise to the range of 7.0-7.1 [3][9].