YI Gang: CNY Exchange Rate Close to Equilibrium

Source: Sina, ChinaScope Financial (Data)

+       YI Gang, Deputy Governor of the Central Bank and Director General of the State Administration of Foreign Exchange, pointed out on July 21 that the CNY exchange rate is close to its equilibrium and that it is expected to remain at this level in the foreseeable future.

+       China’s foreign exchange reserves were stable in 2011. People interpret this as a result of less Central Bank intervention, improved demand and supply conditions, and less volatile capital in and outflows.

Due to the higher inflation rate in China compared to most of its major trade partners, the real appreciation of CNY was quicker in the past two years, pushing CNY exchange rate to its equilibrium quicker than expected.

Real CNY appreciation against industrialized economies currencies is accelerated by higher inflation in China. In relation to emerging market economies currencies, China’s inflation is markedly lower and so is the real appreciation.

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Dec 09 - USD/CNY Hits Lower Trading Limit for the Seventh Consecutive Day

Source: China Business News, ChinaScope Financial (Data)

+   The USD/CNY central parity during the intraday trading was 6.3319 on Dec. 8, continuing the RMB’s depreciation against the USD.

+   So far, the USD/CNY rate has hit the lower limit of its trading range for seven consecutive days, which has not occurred since the reform of the Chinese currency trading system in 2005.

+   An official from the Ministry of Commerce commented on Dec. 7 that the continuous decline of the RMB show that the Chinese government is not controlling the RMB exchange rate, but that it is moved by market forces.

+   Related Data: Interbank Market USD/CNY Exchange Rate

Interbank exchange rates reflect the expectation for depreciation of RMB

For more data on currencies, please visit www.chinascopefinancial.com

Other News Headlines

n Sharp Decline in China’s Inflation Rate: CPI for Nov. 4.2% YoY

n USD/CNY Hits Lower Trading Limit for the Seventh Consecutive Day

n Poor Performance in Securities Industry, Securities Firms Cut Wages

n Corporate Bond at RMB 4.3 Trillion in 2010, Accounting for 10% of GDP

n Zhejiang: Small Loan Companies Have Lent out Nearly RMB 150 Billion in the Past Three Years

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