The RMB Market Has Been Lowered For Second Consecutive Weeks, And There Is Still Room For Further Easing.

The Central Bank of China failed to withdraw funds from the financial system this week after its first interest rate cut last month in 2012. Bank of America and Eastern Bank of China expect the Central Bank of China to lower the reserve requirement ratio of banks. Barclays predicts that the central bank will lower interest rates again. Data released this week show that China's manufacturing sector decelerated in November. It is estimated that the data released in December 8th will show a slowdown in export growth.

International Bank of Agriculture Hong Kong Lin Qiaoji, director of research joint operations, said that many people now expect the central bank to cut interest rates or reduce the deposit rate; if liquidity increases, the renminbi may depreciate. Easing policy is a sign of economic weakness, which will reduce market confidence in RMB.

China foreign exchange Trading center data show that the RMB fell 0.12% against the dollar this week, 12:50 Beijing time 6.1530. The central bank today raised the central price by 0.06% to 6.1373.

No deliveries in 12 months. RMB versus US dollar The distant exchange has fallen 0.07 to 6.2670 since November 28th, 1.8% lower than the spot exchange rate in Shanghai. The contract rose 0.04% today. Bloomberg data show that the offshore renminbi in Hongkong appreciated by 0.12% this week, rising 0.04% to 6.1529 today.

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The international investment bank Citigroup said in a report released on Thursday (December 4th) that there will be a steady two growth rate in the short term, and the renminbi will reverse the appreciation trend.

The report shows that China's economy will enter the "new normal and new cycle". It is expected that China will reduce its GDP growth target to 7% in 2015, but Citigroup believes that next year's growth will be slightly lower than that.

In the short term, the real estate market is the biggest risk, so it is more effective to cut interest rates than to reduce the deposit reserve ratio, said Shen Minggao, director of Citigroup China research and chief economist of Greater China at a press conference.

At the same time, it also pointed out that there are still two interest rates cut from now until the first half of next year, and that symmetric interest rate cuts are more likely than asymmetric interest rate cuts, and the possibility of dropping the benchmark is also increasing as capital outflows increase.

Citigroup predicts that the Chinese government's economic growth target will be reduced to 7% next year. However, the uncertainty of global economic growth and the adjustment of the real estate market in 2015 will lead to weaker domestic and foreign demand. The annual growth in 2015 is expected to be slightly lower than the growth target, which is 6.9%.

On the RMB side, the report shows that with the support of low growth, low inflation, low interest rate and strong dollar, the RMB / US dollar will reverse the appreciation trend, slightly depreciate to 6.25 in the next 6-12 months, and maintain two-way floating in the 6-6.3 range.