Core Viewpoint - In July, the US dollar experienced a significant rebound due to the Federal Reserve's decision to maintain interest rates and accelerated tariff negotiations with major trading partners, while the Chinese yuan faced downward pressure despite some support from the central bank's actions [1][2]. Exchange Rate Dynamics - The average daily trading volume in the interbank foreign exchange market reached $206.43 billion in July, maintaining above $200 billion for four consecutive months, with a year-on-year increase of 9.38% [2]. - The onshore yuan fluctuated within a narrow range of 7.1550 to 7.1860 at the beginning of July, followed by a slight appreciation, but ultimately depreciated by 0.38% to close at 7.1930 by the end of the month [2]. - The CFETS yuan index against a basket of currencies rose to 96.76, reflecting a 1.48% appreciation compared to the previous month [2]. Offshore and Onshore Yuan Discrepancy - In July, the offshore yuan shifted from a premium to a discount against the onshore yuan, with the average daily discrepancy being -14 basis points, indicating minimal deviation between the two rates [3]. - The first half of July saw a balanced buying and selling force in the spot market, but by the second half, there was a notable increase in demand for buying yuan, leading to an overall net buying position for the month [3]. Interest Rate Differentials - In July, the yield on 10-year US Treasury bonds rose from approximately 4.25% at the beginning of the month to a peak of 4.5% in mid-July, before settling at 4.37% by the end of the month [4][5]. - The interest rate differential between Chinese and US bonds widened slightly, ending the month at -271 basis points [5].

Core Viewpoint - The People's Bank of China emphasizes the importance of monitoring cross-border capital flows and maintaining the stability of the RMB exchange rate in its monetary policy report for Q2 2025 [1] Group 1: Monetary Policy Measures - The report highlights the need for comprehensive measures to enhance the resilience of the foreign exchange market and stabilize market expectations [1] - It stresses the importance of preventing excessive fluctuations in the exchange rate while keeping the RMB at a reasonable and balanced level [1] Group 2: Risk Management - The central bank encourages enterprises and financial institutions to adopt a "risk-neutral" mindset [1] - Financial institutions are guided to provide exchange rate hedging services to small and medium-sized enterprises based on actual needs and risk-neutral principles [1] - The aim is to create a stable exchange rate environment for the real economy [1]

Core Viewpoint - The People's Bank of China emphasizes the need to enhance the resilience of the foreign exchange market and stabilize market expectations to prevent excessive fluctuations in the exchange rate, aiming to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level [1] Group 1 - The monetary policy committee of the People's Bank of China held its second quarter meeting for 2025 on June 23 [1] - The meeting highlighted the importance of preventing risks associated with exchange rate overshooting [1] - The focus is on maintaining the RMB exchange rate stability within a reasonable and balanced range [1]

Group 1: International Gold Market - On Friday, international gold prices fluctuated and closed higher, opening at $3304.12 per ounce, reaching a high of $3347.59 and a low of $3274.30, ultimately closing at $3326.46 per ounce [1][10] - COMEX gold futures closed at $3329.10 per ounce [10] - The SPDR gold ETF holdings stood at 937.94 tons [12] Group 2: Currency and Monetary Policy - The onshore RMB against the USD closed at 7.2461, down 106 basis points from the previous trading day, with a weekly increase of 171 basis points [1][18] - The People's Bank of China conducted a 770 billion yuan 7-day reverse repurchase operation, resulting in a net injection of 770 billion yuan for the day [1][13] - The US dollar index decreased by 0.21%, closing at 100.4218 [1][18] Group 3: Macroeconomic Events - High-level economic talks between China and the US took place in Geneva, which alleviated some investor concerns and supported a rebound in US stocks and the dollar, putting pressure on international gold prices [1][20] - US Commerce Secretary warned that tariff negotiations with Japan and South Korea would take considerable time, and President Trump stated he would impose at least a 10% tariff on trade partners [1][20] - Several Federal Reserve policymakers expressed hawkish views, emphasizing the importance of maintaining stable long-term inflation expectations [1][20] Group 4: Domestic Gold Market - The Shanghai Gold Exchange's AU99.99 spot gold contract closed at 785.50 yuan per gram, while the main futures contract AU.SHF closed at 788.42 yuan per gram [11]

Core Viewpoint - The recent unilateral and protectionist actions by the U.S. have led to significant volatility in international financial markets, impacting the RMB to USD exchange rate, which has fluctuated but returned to levels similar to those before the U.S. announced additional tariffs on trade partners [1] Group 1 - The RMB exchange rate has experienced both depreciation and appreciation since April, reflecting normal market fluctuations and the underlying economic fundamentals that support the exchange rate [1] - The foreign exchange management department plans to enhance monitoring of foreign exchange conditions and maintain exchange rate flexibility to serve as an automatic stabilizer for macroeconomic and international balance of payments [1] - There will be ongoing efforts to enrich the macro-prudential management toolbox for cross-border capital flows, aiming to correct pro-cyclical market behaviors and prevent risks associated with excessive exchange rate adjustments and abnormal cross-border capital movements [1]