Two Way Floating Of RMB Exchange Rate Or A Realistic Option

The central parity of RMB P against the US dollar has gone out of the market in recent years.

In the first two months, the central parity of RMB against the US dollar has fallen by 0.400%, and spot price has fallen by 1.483%.

Since March, the depreciation rate of RMB has continued to expand.

In fact, from the basic analysis, the exchange rate of RMB against the US dollar may be close to the equilibrium level, and does not have the basis of unilateral appreciation.

This means that the central bank's exchange rate policy may have changed, and the progress of the exchange rate reform may be ahead of schedule, and the two-way floating of the RMB exchange rate has become a realistic option.

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< p > from a fundamental perspective, we can examine whether the RMB exchange rate reaches equilibrium level in the three stages of short term, medium term and long term.

First of all, in the short term, interest rate parity plays a major role.

Because there is a spread between the RMB and the US dollar, < a href= "//www.sjfzxm.com/news/index_cj.asp" > international capital < /a > will borrow money from the US dollar market to flow into our country, resulting in a shortage of RMB in the market, resulting in the appreciation of the RMB against the US dollar.

In fact, since last year, some arbitrage funds have been moving across the border through trade channels and capital account channels, squeezing the monetary policy of the central bank.

For our country, it is not enough to sacrifice interest rates for the exchange rate.

Therefore, there is an irreconcilable contradiction between maintaining the interest rate level, implementing effective control of the RMB exchange rate fluctuation and curbing hot money. At this time, the RMB exchange rate falls, although it runs counter to the short-term supply and demand in the money market, but it can effectively repel arbitrage funds while maintaining interest rates at a steady rate. Three.

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< p > secondly, from the medium term, we can refer to purchasing power parity (PPP) and balance of payments for measuring the equilibrium level of "a" href= //www.sjfzxm.com/news/index_cj.asp "/a".

According to world bank data, from 2005 to 2012, China's PPP amounted to 1 US dollars equal to 3.45, 3.47, 3.64, 3.85, 3.80, 4, 4.23 and 4.23 yuan respectively, which were equal to 42%, 44.3%, 44.3%, 44.3%, 44.3%, 44.3%, 44.3%, 44.3%, 44.3%, 44.3%, 44.3%, and 4.23 respectively.

Except for 2009, PPP rose in other years.

Although the data in 2013 have not yet been released, PPP continues to rise as a big probability event.

This shows that although the RMB exchange rate against the US dollar is still underestimated from the perspective of PPP, the space for continued appreciation has been getting smaller and smaller.

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< p > balance of payments accounts for this problem.

It is generally believed that the ratio of sustainable current account surplus to GDP should not be higher than 3% to 4%.

In 2007, China's current account surplus was about 10% of GDP, which means that the exchange rate of RMB against the US dollar may be significantly lower than the equilibrium level at that time.

After the outbreak of the subprime mortgage crisis in the United States, the ratio of China's current account surplus to GDP decreased year by year. In 2010, it dropped to 4%, dropped to 2.8% in 2011, and further decreased to 2.6% in 2012, and dropped to 2.1% in 2013, a 9 year low.

This shows that from the perspective of external equilibrium, the exchange rate of RMB against the US dollar may be close to the equilibrium level.

Judging from the repeated statements made by the central bank, the balance of payments is one of the main factors in its view that the RMB exchange rate is near equilibrium and can achieve two-way volatility.

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< p > finally, in the long run, according to the "Ba Lhasa Samuelson effect", it is decided that the factor of a country's < a href= "//www.sjfzxm.com/news/index_cj.asp" > /a > /a is labor productivity, and the growth of labor productivity is even higher, and the currency of the country will have an appreciation of the real exchange rate.

In the long run, the main factor determining whether the RMB will continue to appreciate to the dollar is the comparison of labor productivity between China and the United States.

Data show that from 2010 to 2013, China's labor productivity grew by 10.05%, 8.87%, 7.23% and 7.28%, respectively.

In fact, after more than thirty years of rapid development, the aging stage of our society has arrived in advance, and the demographic dividend has come to an end. The extensive growth mode and environmental constraints have determined the marginal decline of labor productivity.

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In the United States, after the subprime crisis, the growth rate of labor productivity in the United States has declined, and negative growth has also occurred in some quarters. P

Even so, labor productivity in the US is still in the leading position globally.

With the rapid arrival of the new round of technological revolution and the decline of the employment population, the labor productivity in the United States has been showing signs of acceleration in the near future.

Therefore, from the perspective of labor productivity, if our country can not achieve "bend overtaking" through economic restructuring, the long-term appreciation of RMB against the US dollar will be very limited.

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< p > of course, the two-way floating of the RMB exchange rate through the central bank is only the first step. After the balance between the spot and forward positions, we should introduce a regular RMB exchange rate floating mechanism to expand the fluctuation of the RMB exchange rate.

In the upper and lower limits, the market price should be let go, and the intervention measures should be more pparent so that the RMB can truly realize the two-way fluctuation of marketization.

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