CCTV News:On July 31st, the International Sharp Review of China Central Radio and Television Station broadcasted an article entitled "There is no need for China to manipulate the RMB exchange rate", which was reprinted by many overseas media.
On July 31, Russian Siberian News Network, European Times German Network, German-Chinese Report website, Spanish Radio International website, Italian RADIOWE website (facebook, twitter), Portuguese Lisbon Rainbow FM website (facebook), Universal Iberian APP, Brazil Rio Headline China Radio Website (facebook), Brazil Sao Paulo World China Radio Website (facebook), Indian Daily Morning News website, Turkish Economic Observation Network, Radio Elshinta Indonesian website, Czech Today Information website, Tanzanian African Media Group facebook account, UAE Ain News Network, Cambodian media freshnews website, American Global Oriental Company official website, Chinese PT portal, Chinese headline APP, Portuguese news APP(facebook, twitter), Many overseas media such as Nordic Times website, European Union Chinese website, West Africa online website, Africa Times website, Europe-China United Times website, Greek China website, Japanese Chinese business website and so on have forwarded them one after another. On August 1st, Hong Kong Ta Kung Pao and Indonesia International Daily also published this article. The main reports are as follows:
In response to the recent unilateral accusation by the United States that China manipulated the RMB exchange rate, Maurice &bull, chief economist of the International Monetary Fund (IMF); Obst Feld recently told the American media: "We don’t have any evidence that China manipulates the currency."
In fact, "China’s exchange rate manipulation theory" is an old saying of the United States, which lacks objective basis and even goes against the direction of RMB exchange rate market-oriented reform. As Geng Shuang, a spokesman for the Ministry of Foreign Affairs of China, said, the RMB exchange rate is mainly determined by market supply and demand, and it fluctuates in both directions. China has no intention to stimulate exports through competitive devaluation of the currency.
According to the definition of IMF, "exchange rate manipulation" refers to a country’s long-term, large-scale and one-way intervention in its own exchange rate, which leads to the exchange rate being beneficial to its own trade and thus gaining illegitimate interests in trade.
Analysts pointed out that there are three main reasons why China has no motivation and necessity to manipulate the exchange rate to stimulate exports:
First, domestic consumption has become the dominant force in China’s economic growth. With the continuous upgrading of domestic production and household consumption, mid-to-high-end consumption will accelerate the economic transformation led by modern service industry, and the leading role of consumption in China’s economy will be further enhanced. There is no need for China to stimulate exports by intervening in the RMB exchange rate.
Second, opening wider to the outside world will provide solid support for RMB assets. With the deepening of opening up and the promotion of RMB internationalization, RMB assets are increasingly favored by overseas institutions.
Third, it is not worth the loss to intervene in RMB depreciation. Since the beginning of this year, China has launched a series of measures to further deepen its opening up and expand its imports. If it intervenes in RMB depreciation at this time, it will definitely increase the import cost, not to mention that the import growth rate of China’s goods trade is far higher than the export growth rate. Under this background, it is undoubtedly not worth the loss to adopt RMB depreciation strategy.
So, how should we view the recent fluctuation of RMB exchange rate?
First of all, it is related to the rising global risk aversion. The Trump administration’s trade protectionism has stimulated global risk aversion, affected the entire foreign exchange market, brought about repeated fluctuations in US stocks, increased market uncertainty, and continued decline in commodity prices. Recently, the RMB exchange rate fluctuated, which is more of an emotional performance of the market.
Second, it is related to the strength of the US dollar index. Judging from the situation in the first half of the year, the US dollar index rose by 2.45% as a whole, but in the same period, the central parity of RMB against the US dollar was only lowered by 1.67%, which was much lower than the increase of the US dollar index. Therefore, the fluctuation of RMB is a spontaneous "compensation and correction" behavior of the market under the warming of risk aversion.
Third, it is related to the Fed’s interest rate hike. Since April, the RMB has depreciated by more than 8% against the US dollar. During this period, US monetary policy is in the process of raising interest rates and shrinking its balance sheet. The Federal Reserve raised interest rates twice in March and June, and increased the number of interest rate hikes this year from three to four, and at the same time, cooperated with corresponding measures to shrink the table to recover liquidity. The Bank of China adheres to a prudent and neutral monetary policy, foreseeing pre-adjustment and fine-adjustment, and manages the general gate of money supply. To a certain extent, this round of RMB exchange rate fluctuation is a market behavior caused by the differentiation of monetary policies between China and the United States, and there is no intervention component.
As some analysts have pointed out, the recent fluctuation of RMB exchange rate has not exceeded the reasonable range, and the RMB is still relatively strong in the global currency. The two-way fluctuation of exchange rate is the result of market action. With China’s economy running well and foreign exchange supply and demand in balance, the RMB exchange rate is completely stable at a reasonable and balanced level at present and in the future. There is absolutely no need for China to interfere with the trend of RMB exchange rate.
A number of overseas media forwarded "International Sharp Review" articles:
Russian Siberian News Network forwarded on July 31, 2018
"European Times" German website forwarded on July 31, 2018
Italian RADIOWE website (facebook, Twitter) forwarded on July 31, 2018.
Portugal Lisbon Rainbow FM website (Facebook) forwarded on July 31, 2018.
Forward on July 31, 2018 by the website of Brazil’s Rio headlines (Facebook)
Turkish Economic Observer Network forwarded on July 31, 2018
India’s "Daily Morning News" website was forwarded on July 31, 2018
The Indonesian website of Radio Elshinta was forwarded on July 31, 2018.
Cambodian media freshnews website forwarded on July 31, 2018
Portuguese news APP(facebook, Twitter) forwarded on July 31, 2018.
Hong Kong Ta Kung Pao was published on August 1, 2018.
Indonesia’s International Daily was published on August 1, 2018.