Core Viewpoint - Recent fluctuations in exchange rates have made the market focus on the significant appreciation of the Renminbi, which rose nearly 600 points, reaching its highest level since November of the previous year, driven by positive signals from US tariff negotiations [1][2] Group 1: Renminbi Appreciation Potential - The short-term appreciation potential of the Renminbi is expected to be limited, with a range between 7.10 and 7.20, as the central bank's intervention intentions are not clearly indicated [2] - Historical experience shows that the central bank is particularly concerned about the levels around 7.1 and 7.0, which may act as psychological barriers [2] - The central bank may need to control the Renminbi's depreciation against other currencies to avoid new frictions, particularly with the Euro, where the current exchange rate is 8.21 [2] Group 2: Signals from Asian Currency Volatility - The collective movements of Asian currencies may indicate a structural change in exchange rate paradigms, suggesting ongoing pressure on the US dollar [3][4] - The Hong Kong dollar, pegged to the US dollar, faces concerns about maintaining its "weak-side guarantee" amidst a weakening dollar system, which could lead to increased liquidity in the Hong Kong market [3] - The Taiwanese dollar's depreciation and widening interest rate differentials with the US may lead financial institutions to seek diversification strategies, reducing exposure to US assets [3][4] - The Renminbi's mechanism of limiting volatility through central bank interventions and the distinction between onshore and offshore markets may lead to significant fluctuations during long holidays, followed by a return to normal trading patterns post-holiday [4]

Core Viewpoint - Recent fluctuations in exchange rates have made them the focal point of the market, with Asian currencies experiencing significant movements, particularly the Chinese yuan, which surged nearly 600 points against the US dollar, reaching its highest level since November of the previous year [1][4]. Group 1: Currency Movements - The onshore yuan rose to its highest level since November, gaining nearly 600 points in a single day [1]. - The offshore yuan briefly surpassed 7.20 against the US dollar, while the Hong Kong dollar hit its strong-side convertibility guarantee, and the Taiwanese dollar saw a historic surge, accumulating over 9% in two days [4]. Group 2: Factors Influencing Currency Changes - The immediate catalyst for these significant currency movements was positive signals from US tariff negotiations [4]. - Analysts suggest that the yuan's appreciation potential should be tempered, with expectations of trading between 7.10 and 7.20, as the central bank's intervention intentions remain unclear [6]. Group 3: Long-term Implications for Asian Currencies - The collective movements of Asian currencies may indicate a shift in exchange rate paradigms, suggesting structural pressure on the US dollar [6]. - The Hong Kong dollar, Taiwanese dollar, and Chinese yuan represent three distinct exchange rate models, each facing unique challenges and potential adjustments in response to changing global dynamics [6][7]. Group 4: Currency Models - The Hong Kong dollar operates under a model anchored to the US dollar, raising concerns about maintaining its peg amid a weakening dollar system [6][7]. - The Taiwanese dollar's model involves currency undervaluation to accumulate trade surpluses, with potential shifts towards diversification in investment strategies as external conditions change [7]. - The yuan's model focuses on limiting volatility through mechanisms like the central bank's middle rate guidance, with limited participation from domestic financial institutions [7].