A Review of the Renminbi in 2019

来源: CHINA FOREX 2019 Issue 4 作者:Guan Tao
There was a basic equilibrium in China’s foreign exchange market over the first three...

The renminbi slid through the psychological barrier of seven to one US dollar this year but that failed to create panic in the market. Instead there was basic equilibrium. This article takes a look at the currency’s trajectory over much of the year and seeks to explain what happened and why.

The renminbi traced an uncertain path over much of 2019at times falling through the key level of seven to one US dollarand at times making convincing gains.  The central parity rate against the US dollar rose a cumulative 2.0% in the first four months of the yearreaching 6.70 to the dollar at the end of February. Howeverthe mid-rate lost 2.5% in May amid negative market sentimentoffsetting the gains of the previous months. The market rate weakened to more than 6.90 to the US unit and then lost ground again in June and July reflecting a volatile US dollar index and the restart of Sino-US trade talks after the meeting of the two countries’ presidents.

Yetthe US tactic of applying “maximum pressure” after the 12th round of trade negotiations helped weaken the renminbi again in August. The trading price and the mid-rate of the onshore renminbi against the US dollar slipped below seven to one. As of the end of the third quarterthe central parity rate was 7.0729 to the dollar and the closing market price was 7.1381. There had been a fall of 2.8% in the market rate from August 2 and a decline of 3.0% from the end of last year. As this article went to print in late Novemberthe currency was still weaker than seven to the dollar.

Market Forces

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