Core Viewpoints - The article analyzes the current real exchange rate of the RMB from the perspectives of export demand, capital flow, and exchange rate determination theory, concluding that the RMB is currently reasonably valued and may experience short-term fluctuations within a specific range [1][5]. Group 1: Export and Trade Demand - The actual effective exchange rate indicates that the RMB has released downward pressure, supported by strong export performance and trade surpluses, with current account surpluses projected at $253 billion for 2023 and $422 billion for 2024 [2]. - Since 2024, the RMB has depreciated less against the USD compared to other non-USD currencies, and the RMB exchange rate index against a basket of currencies shows an upward trend [2]. Group 2: Capital Flow and Investment Demand - The estimated RMB exchange rate midpoints based on the China-US interest rate differential and risk premium are 7.50 and 7.35, respectively, indicating potential short-term depreciation pressure [3]. - The negative correlation between the China-US interest rate differential and the RMB exchange rate has been high at 93.2% since 2022, suggesting that the equilibrium exchange rate may range from 7.4 to 7.6 [3]. Group 3: Exchange Rate Determination Theory - The BEER (Behavioral Equilibrium Exchange Rate) model is deemed more effective for estimating the RMB's equilibrium exchange rate, which is projected to be between 7.3 and 7.4, with a central value of 7.35 [4]. - The relative purchasing power parity theory suggests a long-term appreciation potential of the RMB to around 6.8, while absolute purchasing power theory indicates a possible undervaluation of nearly 40% [4]. Group 4: Market Sentiment and Economic Indicators - The RMB exchange rate is expected to remain around the equilibrium midpoint of 7.30, with short-term fluctuations anticipated between 7.20 and 7.35, influenced by international balance of payments, market behavior, and sentiment [5]. - Recent manufacturing PMI data indicates a stable economic environment, with the manufacturing sector showing resilience and potential for recovery in PPI readings [6].