A fresh word "CFETS RMB exchange rate index" released an article entitled ' observation of the currency to a basket of currencies a commentary, after the Central Bank's official website after the forward, became a "depegging Declaration".
The evening of December 11, China released CFETS foreign exchange trading center in China's currency the Renminbi exchange rate indices for the purpose of, is "to facilitate the marketing of RMB effective exchange rate changes from different angles."
Can't see how important? Late on the day, people's Bank of China (PBoC) on its official Web site forwarding articles is further revealed the truth.
Article said that for a long time, MarketWatch angle of RMB exchange rate is mainly look at the bilateral exchange rates of the Yuan against the dollar, due to exchange rate fluctuations to regulate various trading partners on trade and investment, thus only observe the Yuan/dollar bilateral exchange rate does not fully reflect the international terms of trade. In other words, the RMB exchange rate should be not only the dollar as a reference, but also with reference to a basket of currencies.
On December 14, the morning, the Central Bank again reproduced in China currency issue the basic stability of the RMB exchange rate against a basket of currencies based on. Stressed that China has always adhered to the market supply and demand basis, adjusted with reference to a basket of currencies, managed floating exchange rate system at the same time, the article above says, market players in the future should not be pegged to the dollar, but more with reference to a basket of currencies, of course, this requires a process to adapt.
The corresponding is December 14 Yuan central parity against the dollar at 6.4495, to the previous day-137 basis points, devaluation of the Yuan for the sixth straight trading day. Devaluation of nearly 5% this year.
On the trend of RMB the next, the article also predict: in the short term, the Yuan against a basket of currencies to adjust the effect has been reflected, from the perspective of long-term fundamentals, conditional keep RMB exchange rate basically stable at a reasonable and balanced level.
"This is a declaration of decoupling from the dollar, mean that in the future more flexible against the dollar, the RMB exchange rate will be more market-oriented, also means that the future will be more concerned about the effective exchange rate, and effective exchange rates has a greater impact on the economy. "Societe Generale Chief Economist, Lu zhengwei in evaluation of the Central Bank's move, which he is expected to, possible future launch of derivatives based on this index, so as to further enrich the RMB exchange rate hedging tools.
Well, the Central Bank hopes the CFETS RMB exchange rate index, what exactly? How to calculate?
Exchange rate index is a weighted average of exchange rates, mainly used for computing a weighted average of the country's currency against a basket of foreign currencies exchange rate movements, simply said that exchange rate indices are more able to fully reflect changes in the value of a currency. CFETS, then is the abbreviation of the China foreign exchange trading center.
It is understood that the CFETS RMB exchange rate indices with reference to the foreign exchange trading center listed 13 foreign exchange currency and calculated by the weight of its trade with China in different weights. Among them, the weight the currencies with the highest followed by dollar, euro, Japanese yen, Hong Kong dollars and the British pound. Sample currency is the Renminbi foreign exchange rate on the day the middle price and settlement price. Index base period is December 31, 2014, the base period index is 100 points.
"Compared with the reference of the single currency with reference to a basket of currencies, better reflect the overall competitiveness of a country's goods and services, can also play the role of exchange rate regulation of imports and exports, investment and the balance of payments. CFETS RMB exchange rate index published for market observation provides a measurement of the RMB exchange rate in order to more fully and accurately reflect the market situation changed. "Central banks are also reproduced in the above article says.
Data is more persuasive: this year, the CFETS Yuan of RMB exchange rate indices and exchange rates between the US dollar and more able to embody the meaning of the Central Bank's move.
At the end of November, BIS reference currency basket, the SDR currency basket of the Renminbi exchange rate index may rise by the end of 2014 and 1.56%, respectively. In contrast, Yuan rate against the dollar has depreciated by nearly 5% since the end of 2014, Yuan at the spot exchange rate against the dollar has depreciated nearly 2% since November. SAC informed 54 SOEs to eight provisions of typical
People familiar with China's currency reform might ask, not declared as early as 2005, China abandoned its dollar peg it?
On July 21, 2005, originally fixed solely to one dollar by the people's Bank of China announced the abolition of monetary policy introduced to market supply and demand basis, adjusted with reference to a basket of currencies, managed floating exchange rate regime, at the same time, the Central Bank announced the official exchange rate from 8.27 Yuan against the dollar to 8.11 Yuan around 2.1%.
Five years later, on June 19, 2010, the Chinese Central Bank decides to further advance the reform of the RMB exchange rate formation mechanism, enhance RMB exchange rate flexibility, and prior to that, due to the outbreak of the global financial crisis, central banks have to be pegged to the dollar.
So why do central banks at this point once again stressed that renminbi currency with reference to a basket of currencies? Analysis will point the finger at the Central Bank or allow the Yuan to depreciate. After all, the Fed's rate hike is imminent.
United Kingdom, the Financial Times wrote on December 12, by announcing a change in the way they measure the value of the Yuan, China paved the way for the further weakening of the currency.
Director of emerging markets at Nomura was quoted situerte·aokeli as saying that the currency basket will make it easier for China's Central Bank pushed down the Yuan's exchange rate against the dollar. He said: "by showing that the RMB appreciation on a trade-weighted basket of currencies in fact, United States authorities will have difficulty criticizing Chinese policy makers allowed the Renminbi to the dollar. "
While the Wall Street Journal thought, any out of the dollar's move will give currency markets and investors and the wide-reaching global trade implications, such as reduced demand for the dollar in China. Doing so will also proves that China is determined to make the Yuan a global currency, and walked out of the shadow of us $, the dollar is the de facto world currency.
"Unclear if and when China would take such a step, since China has talked about such practices in the past. "The Wall Street Journal said.
Following is China currency reproduced on December 14, the Central Bank's official website published the basic stability of the RMB exchange rate against a basket of currencies based on full text:
On December 11, 2015, China foreign exchange Trade Center CFETS RMB exchange rate index has aroused extensive discussions both at home and abroad. Changing perspective view from the point of view of a basket of currencies the currency in the future also continue bilateral exchange rate perspectives that devaluation of the Yuan/dollar exchange rate will open space of sound, reflecting mainly concern bilateral exchange rates of the Yuan against the dollar in the past habits and criteria and behaviour patterns of the formation of deep-rooted, required further discussion.
First, our country has long adhered to the market supply and demand basis, adjusted with reference to a basket of currencies, managed floating exchange rate regime. Since the 2005 exchange rate reform, apart from the stage in China as a responsible country in the world the management of exchange rates other than the slightly more, most of the time the currency is run under the framework of this system. Of course, not with reference to a basket of currencies pegged to a basket of currencies, not mechanically by the basket of currencies changes in indices to adjust the RMB exchange rate, needed as an important basis of supply and demand of the market, coupled with the necessary management, resulting in flexible floating exchange rates.
Secondly, the observation of the RMB exchange rate mainly to a basket of currencies, but the market needed some time to adapt to this perspective. Differences due to the different economies of the economic cycle, monetary conditions and terms of trade could not fully consistent, sometimes the trend or reverse only maintain basic stability of Yuan exchange rate against the single currency means currency distortions may occur resulting in the accumulation of imbalances is not conducive to enhancing economic flexibility to cope with external shocks. In view of this, the Central Bank since the beginning of 2005 currency adjusted with reference to a basket of currencies was introduced. All along, the market highly integrated subjects is considered to a basket of currencies in foreign exchange transactions, especially large institutions such as commercial banks have built their own basket of currencies in Forex trading more in reference to a basket of currencies, but there are still many bodies for the sake of simplifying reference dollars. Market players in the future should not be pegged to the dollar, but more with reference to a basket of currencies, of course, this requires a process to adapt.
Third, in the short term, the Yuan against a basket of currencies to adjust the effect has been reflected. In the short term, on the single currency's bilateral exchange rates reflect different economies to a large extent the differences in their respective position in the economic cycle. Exchange rate indices as a weighted average of exchange rates, to more fully reflect the value of a currency changes. Earlier this year, to December 11, BIS CFETS and reference currency basket of the Renminbi exchange rate index edging up 1.45% and 2.28% refer to the SDR basket of currencies the currency devaluation of the index 0.48%, the nuances of different index reflects the weight of each index are different. Overall, so far this year the index displays the basic stability of the Yuan against a basket of currencies,
Finally, from the perspective of long-term fundamentals, conditional keep RMB exchange rate basically stable at a reasonable and balanced level. First of all, despite China's rapid economic growth are shifting from speed to shift, but remains at a high level in the global comparison. Secondly, labour productivity growth in China continues to be higher than in other major economies, provide strong support for China's exports, but falling commodity prices to save spending on imports, trade surplus with our country has maintained a certain scale. Goods trade surplus is the first 11 months of this year amounted to us $ 539.1 billion. Third, RMB after joining the SDR as a reserve currency, outside the main holdings of Renminbi will gradually increase in assets, market a new logic of observation of the RMB exchange rate is gradually established. Four were China's foreign exchange reserves-rich, in good financial shape, and sound financial system. Therefore, keep the Yuan exchange rates basically stable at a reasonable and balanced level is based.
Following is forwarded by central banks on December 11 of the observation of the RMB exchange rate to a basket of currencies full text:
On December 11, China network released CFETS foreign exchange trading center in China's currency RMB exchange rate index, is important for social observation angle of RMB exchange rate changes.
For a long time, MarketWatch angle of RMB exchange rate is mainly look at the bilateral exchange rates of the Yuan against the dollar, due to exchange rate fluctuations to regulate various trading partners on trade and investment, thus only observe the Yuan/dollar bilateral exchange rate does not fully reflect the international terms of trade. In other words, the RMB exchange rate should be not only the dollar as a reference, but also with reference to a basket of currencies. Exchange rate indices as a weighted average of exchange rates, mainly used for computing a weighted average of the country's currency against a basket of foreign currencies exchange rate changes, to more fully reflect the value of a currency changes. Compared with the reference of the single currency with reference to a basket of currencies, better reflect the overall competitiveness of a country's goods and services, can also play the role of exchange rate regulation of imports and exports, investment and the balance of payments. CFETS RMB exchange rate index published for market observation provides a measurement of the RMB exchange rate in order to more fully and accurately reflect the market situation changed.
From international experience, exchange rate indices published by the monetary authorities, such as the Federal Reserve, the European Central Bank, the Bank of England, have issued their own currency exchange rate indices also issued by the Agency, such as the Intercontinental Exchange (ICE) released the dollar index has become an important international market index. The China foreign exchange trading center for RMB exchange rate index in line with international practices. 2015, the CFETS trend of RMB exchange rate index is relatively stable, on November 30 to 102.93, 2.93% appreciation of the end of 2014. This suggests that, although since 2015 and the Renminbi exchange rate against the dollar, but from the perspective of a more comprehensive appreciation of the Yuan against a basket of currencies is still small, in major international currencies the Yuan remains a strong currency.
China foreign exchange Trade Center CFETS RMB exchange rate index published on a regular basis, will help lead the market changed focus on bilateral exchange rates of the Yuan against the dollar in the past habits, increasingly effective exchange rate calculated with reference to a basket of currencies as the main frame of the RMB exchange rate level, is conducive to maintaining the RMB exchange rate basically stable at a reasonable and balanced level.
For the purpose of market of RMB effective exchange rate changes from different angles, China foreign exchange Trade Center also lists the BIS reference currency basket, the SDR currency basket of the Renminbi exchange rate index at the end of November, both index may rise by the end of 2014 and 1.56%, respectively.
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