What is the trend of RMB exchange rate？ These data are the most convincing!

　　Last week, the RMB exchange rate market was rough.

　　On August 5, the offshore and onshore exchange rates of RMB against the US dollar broke through the integer mark of "7" successively, which aroused great concern in the market.

　　Only one day later, the United States threw out a big hat. On August 6th, the US Treasury Department announced that China was listed as a "currency manipulator", which was the first time since 1994 that the United States listed China as a "currency manipulator".

　　A few hours later, the People’s Bank of China issued a statement saying that China would not take the pot of "manipulating the exchange rate"!

　　The statement said that China has implemented a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies. The RMB exchange rate is determined by market supply and demand in terms of mechanism, and there is no problem of "exchange rate manipulation". Since August this year, the RMB exchange rate has depreciated to a certain extent, which is mainly a reflection of market supply and demand and fluctuations in the international currency market under the background of changes in the global economic situation and intensified trade frictions, and is driven and determined by market forces.

　　The statement also pointed out that the label given to China by the United States does not conform to the quantitative standard of the so-called "currency manipulator" formulated by the US Treasury, which is a serious violation of international rules.

　　On August 9th, there were two powerful reports on RMB exchange rate: one from the People’s Bank of China and the other from the International Monetary Fund (IMF).

　　The China People’s Bank’s Monetary Policy Implementation Report of China in the Second Quarter of 2019 says: Since 2019, the RMB exchange rate has fluctuated in both directions based on market supply and demand and with reference to the exchange rate changes of a basket of currencies. The RMB exchange rate has remained basically stable at a reasonable and balanced level, and the exchange rate is expected to be stable.

　　So, how does the RMB exchange rate float in both directions? 1— In April, mainly due to the smooth start of the national economy, the gradual increase of positive factors, and the increase of domestic stocks by foreign investors, the exchange rate of RMB against the US dollar and against a basket of currencies appreciated. Since May, the RMB has depreciated against the US dollar, mainly due to the increase of external uncertainty. Since August, influenced by the international economic and financial situation and the expectation of increasing tariffs on China, the exchange rate of RMB against the US dollar has broken 7 yuan.

　　The report of the International Monetary Fund (IMF) is even more "face-lifting" to the US Treasury. The report on the fourth consultation between the Executive Board and China issued by the International Monetary Fund pointed out that although the RMB depreciated against the US dollar, it was generally stable relative to a basket of currencies. China has abundant foreign exchange reserves. Since the fourth negotiation last year, the real effective exchange rate of RMB has depreciated by about 2.5%, and the People’s Bank of China has hardly intervened in the RMB exchange rate.

　　What is the trend of RMB exchange rate if a longer period of time is intercepted? What other important measures will be taken to reform the RMB exchange rate mechanism in the future? On August 10th, at the 3rd China Financial Forty (CF40) Yichun Forum, many experts talked about this issue and gave detailed data. Let’s have a look.

　　From early 2005 to June 2019, the nominal effective exchange rate of RMB appreciated by 38%, and the real effective exchange rate appreciated by 47%.

　　"The most authoritative institution for exchange rate assessment in the world is not the US Treasury, but the International Monetary Fund." Zhu Juan, director of the International Department of the People’s Bank of China, said that the IMF, as the core institution of the international monetary and financial system, has long been committed to promoting international financial stability and monetary cooperation, promoting the expansion and balanced development of international trade, and maintaining orderly exchange arrangements among member countries, which is the main platform for macroeconomic policy and economic coordination among countries.

　　In fact, the International Monetary Fund has always supported China on the RMB exchange rate. Since 2015, the International Monetary Fund and China have repeatedly pointed out in the annual Article IV consultation that the RMB exchange rate level and economic fundamentals are basically the same. On July 10th this year, the IMF’s report on external affairs also pointed out that China’s real effective exchange rate is at the level corresponding to the fundamentals and ideal policies.

　　The IMF also suggested that China could expand exchange rate flexibility in the face of escalating trade frictions.

　　Since the beginning of this year, the RMB exchange rate has been in a two-way floating and basically stable state at a reasonable and balanced level. What is the trend of RMB exchange rate if a longer period of time is intercepted?

　　According to the data released by the Bank for International Settlements, since the reform of the exchange rate formation mechanism started in 2005, that is, from the beginning of 2005 to June 2019, the nominal effective exchange rate of RMB has appreciated by 38% and the real effective exchange rate has appreciated by 47%, making it the strongest currency among the G20 economies and one of the currencies with the largest appreciation in the world.

　　In other words, in the past 15 years, the RMB has not depreciated, and it is one of the currencies with the largest appreciation in the world!

　　Such a conclusion may come as a surprise to many people. But in retrospect, in recent years, the RMB has basically appreciated against the euro, the pound and the Hong Kong dollar.

　　For example, the exchange rate of RMB against the British pound was above 10 at the earliest, and reached 9 last year. Now it is around 8.5. In other words, it used to take 10 yuan RMB to change one pound, but now 8.5 yuan can change one pound. It is said that Chinese’s travel to Britain in the first quarter of this year increased by 27% year-on-year, due to the fall of the pound.

　　"In the Asian financial crisis in 1997 and the global financial crisis in 2008, China has always promised to keep the RMB exchange rate stable, which has strongly supported the stability of the international financial market and the global economic recovery." Zhu Juan said that since 2018, the United States has been escalating trade disputes, China has always insisted on not engaging in competitive devaluation, and China has not used the exchange rate as a tool to deal with trade disputes.

　　In the whole year of 2018, the bilateral exchange rate of RMB against the US dollar depreciated by less than 5%, and the exchange rate against a basket of currencies depreciated by only about 1.5%. Since the beginning of this year, with the frequent escalation of trade frictions in the United States, both the bilateral exchange rate and the multilateral exchange rate have depreciated by less than 2%. "Under the extreme pressure of the United States and escalating trade frictions, the pressure on exchange rates and capital flows is increasing, and it is not easy for the renminbi to perform like this." Zhu Xi said.

　　Expand new development space and gradually improve the internationalization of RMB.

　　"The exchange rate issue is one of the core issues in the financial market. The exchange rate is a visible and tangible currency price relationship that is closely related to the country, enterprises and even individuals. It is a quantifiable key indicator. " Chen Yuan, Vice Chairman of the 12th Chinese People’s Political Consultative Conference and Chairman of the CF40 Standing Council, said.

　　China, as a responsible big country, has been adhering to the spirit of the declaration of G20 leaders’ summit for more than ten years, not engaging in competitive devaluation and not using the exchange rate for competitive purposes.

　　"The core of our exchange rate policy system is a managed floating exchange rate system, which has continued since 2005." Huang Yiping, Chairman of the Academic Committee of the China Financial Forty Forum and Vice President of the National Development Institute of Peking University, believes that the People’s Bank of China has three important objectives for the operation of foreign exchange policy: first, to expand the flexibility of the RMB exchange rate; second, to gradually determine the exchange rate level by the market mechanism; and third, to keep the exchange rate relatively stable at a balanced and reasonable level and minimize excessive fluctuations in the short term.

　　In July, 2005, the RMB exchange rate started a managed floating exchange rate system with reference to a basket of currencies. Since then, the People’s Bank of China has continuously explored and improved a more market-oriented exchange rate formation mechanism.

　　In April 2012, the daily fluctuation range of RMB against USD in the inter-bank foreign exchange market expanded by 1% from 0.5%, and further expanded by 2% in 2014.

　　In August 2018, the People’s Bank of China promoted the reform of the central parity of the RMB exchange rate, and gradually clarified the formation mechanism of the central parity of the RMB exchange rate of "closing exchange rate+exchange rate change of a basket of currencies+countercyclical factor". The regularity, transparency and marketization of exchange rate policy are constantly improving.

　　Over the years, China has made concerted efforts to promote the reform of exchange rate formation mechanism, the opening of financial services, and the improvement of capital account convertibility, and the flexibility of RMB exchange rate has been continuously enhanced. The strong monetary characteristics of the RMB are also closely related to these reforms.

　　At the same time, with the continuous expansion of the depth and breadth of the use of RMB in cross-border trade and investment, the degree of internationalization of RMB has increased rapidly.

　　In 2015, the People’s Bank of China implemented a series of reform measures, which solved various policy and technical obstacles to the entry of RMB into the SDR basket, and finally pushed the IMF to announce the inclusion of RMB in the SDR basket in October 2015.

　　In October 2016, RMB officially joined SDR, which became a milestone of RMB internationalization, and it was also a milestone of China’s participation in global governance. After the entry into force of RMB in SDR basket, it has had a series of positive impacts on China’s economy, including the rising demand and attractiveness of RMB asset allocation, the announcement by many neighboring countries that RMB will be included in foreign exchange reserves, and the RMB will become the official trading currency of IMF and multilateral development banks.

　　"At present, the RMB is still a currency dominated by the domestic economy, and the internationalization of the RMB is still in its infancy. Although the RMB has achieved important results in joining SDR, the proportion of RMB used for investment and settlement is still relatively small worldwide. " Chen Yuan said that to solve the strategic position of foreign exchange, it is basically to strengthen the development and construction of RMB local currency and further enhance the international influence and status of RMB.

　　"Since the founding of New China 70 years ago, the RMB has been running stably in China for a long time and will continue to run stably in the future. We should take more innovative measures, be brave in exploring and expanding new development space, and gradually improve the internationalization of the RMB. " Chen yuan said. (People’s Daily Central Kitchen-Spicy Finance Studio Li Yuanzhe)