Risk Control Of RMB Exchange Rate Depreciation

The trend of RMB P exchange rate has been the focus of attention at home and abroad recently.

Last week, the yuan dropped four trading days against the US dollar, hitting a 16 month low on Thursday.

Brown, vice president of Bank of Harriman and senior monetary strategist Ilan Slott, recently told reporters in the securities times that the devaluation of China's currency is more important to China, but the risk is controllable.

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Slott, when asked about the devaluation of the renminbi, said that although the recent trend of RMB has changed greatly for China's domestic market, the change is not huge from absolute value. He believes that the focus of the impact on the RMB should be in China, not overseas.

"One of the motives of the Chinese government to allow the renminbi to continue to depreciate is to provide support for exporters."

Slott said, "at least it can stop the harm of appreciation to exports."

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< p > the phenomenon of RMB arbitrage broke out due to the decline of RMB a href= "//www.sjfzxm.com/news/index_cj.asp" > exchange rate < /a >, Slott believes that some of the risks arising from the current market are under the control of the Chinese government, including the accumulation of forced warehouses and the prevention of most structured products with the character of carry trade in Hongkong.

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< p > although the related products belong to OTC pactions, the specific losses of many traders are difficult to predict, but in the view of the group, they have gained considerable profits in the past several quarters, and the broader or systematic consequences of this phenomenon have not yet been foreseen.

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< p > Slott also analyzed the recent policy of < a href= "//www.sjfzxm.com/news/index_cj.asp" > the Federal Reserve < /a > and Japan a href= "//www.sjfzxm.com/news/index_cj.asp" > the central bank < /a >.

"Although the Federal Reserve is gradually reducing its bond buying program, it is worth noting that the US balance sheet will continue to expand as a whole."

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Less than P, "the total asset purchase size of the Federal Reserve will continue to expand to October this year," he said.

Even though the Federal Reserve has cut back on the scale of its purchases, it's doubtful that the United States Federal Reserve will increase interest rates and fluctuate the yield of the 10 year treasury bonds before the third quarter of 2015. It is estimated that the yield of the us ten year treasury bonds will gradually rise to 3% this year.

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< p > for the Bank of Japan recently stated that it will maintain the current interest rate level of 0.10% and the scale of quantitative easing unchanged, and continue to expand the basic monetary policy with the scale of 60-70 trillion yen per year.

"Many people had expected the BoJ to strengthen QE operations by the end of July, but Japanese government officials said there was no need to worry."

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When asked about the impact of Japan's monetary policy, Slott said that it is too early to talk about the impact of P.

On the other hand, he mentioned that the increase in the price of Japanese companies due to the increase in sales tax shows that Japan's recent inflation risks are upside down, but that does not mean that the Bank of Japan will take a step back from the radical monetary stimulus.

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