Why does the RMB continue to depreciate? Do you need to worry about the continued depreciation of the RMB?

Recently, the depreciation of RMB exchange rate has aroused great concern in the market. Today, the exchange rate of RMB against the US dollar soared by 600 basis points, which made people panic. Many netizens said that this round of depreciation has no end.

From around 6.9 at the beginning of this year, it has depreciated by 2.2% in just half a month. At this rate, the high point of the last sharp appreciation of the US dollar will be tested at the end of this month. Today I will talk about this topic in a simple way (I don't understand ~):

For the reasons for the recent sharp depreciation of RMB, if we elaborate, we can't finish talking for days and nights, which is not a problem that ordinary people can study. It's really too profound.

I also looked up a lot of information about this problem on the internet, and I feel that these two explanations are more reasonable and intuitive. I try my best to express it in popular language so that everyone can understand:

The reason why RMB interest rate keeps decreasing At present, mainstream countries in Europe and America keep raising interest rates, and China has adopted the operation of keeping interest rates down.

Take the dollar as an example. The United States raised interest rates ten times in a row, and the interest rate range remained at 5%-5.25%. Continuous interest rate hikes have greatly increased the yield of the US dollar.

The RMB keeps cutting interest rates. For example, if you deposit 6,543,800 yuan in the bank with an annual interest rate of 4%, it will be 40,000 yuan a year. After the interest rate cut, if the annual interest rate is 2.5%, there will be 25,000 interest a year, which is 1.5 million at once. The same is 6.5438+0 million yuan. After the interest rate cut, it is less valuable than before, which leads to the depreciation of the RMB.

Then, a large number of people who hold RMB will convert RMB into foreign exchange such as dollars or euros with stable value, which will further aggravate the depreciation of RMB and trigger imitation effect.

For example, if you are an American and plan to invest in China, you take out $65,438+00,000 and change it into RMB 60,000. After depreciation, 65,000 yuan can be exchanged for $65,438+0,000.

In the end, you earned 5000 yuan, and the RMB depreciated, which is equivalent to you tossing for a long time. In the end, you still earned $65,438+0,000, and you were lonely ... at this time, your mind would want to go back to the United States to do business, which eventually led to less funds coming in. The withdrawal of foreign capital from China will further affect the stability and development of China's economy and eventually lead to the depreciation of RMB.

About 80% of the trade between China and Russia related to the Russian-Ukrainian war is settled in RMB and ruble. For example, we use RMB to buy Russian oil and natural gas. After receiving RMB, Russia purchased US dollars, euros and pounds in international markets such as Hong Kong and London, and purchased needed materials. But unfortunately, because Russia is currently sanctioned by European and American countries, no one wants rubles and can't buy anything in the international market, so RMB has become an important channel for Russia to obtain foreign exchange. The direct impact of this operation is that the RMB is weak in the offshore market, which leads to the continuous depreciation of the RMB.

Of course, there are many reasons for RMB depreciation. However, regardless of external factors or internal factors, RMB depreciation has been released after two rounds, and it is said that the depreciation pressure has basically cleared up. Some experts have analyzed that although the third quarter still faces the fluctuation period of RMB exchange rate adjustment, the RMB exchange rate will basically remain in the range of 6.8-7.25, and will not continue to fall. The expectation of exchange rate stability has also been highly valued by Yang Ma, and the Monetary Policy Committee also made relevant emphasis at the regular meeting in the second quarter of 2023.

In short, these are not things that ordinary people worry about. Do we ordinary people need to worry about the continued depreciation of the RMB? This should be divided into two situations:

The depreciation of RMB has different effects on people. Why do you say that? Generally speaking, there are two ways of RMB depreciation, one is internal depreciation and the other is external depreciation.

The devaluation of RMB means that the purchasing power of RMB in China is declining, which means that ordinary people can buy less and less things with the same money, which is what we often say: money becomes worthless, so this situation is unfavorable.

On the surface, it is, but not necessarily in the deeper influence.

Assuming that the renminbi continues to appreciate, many people may hold their money in their hands and wait for it to appreciate, instead of spending or investing it. If people don't spend and invest, the economy will not be active. If the national economy is not good, wages will be reduced, which is obviously unfavorable.

Let's talk about RMB depreciation and RMB depreciation first. These two situations have great influence. One is the need to go abroad, and the other is international business.

For those who need to go abroad, the depreciation of RMB will increase the cost of going abroad. Because you want to go abroad, you need to convert RMB into the currency of the corresponding country. After devaluation, the same amount of RMB can be exchanged for less foreign currency.

For people engaged in foreign trade, RMB is more friendly to export trade and will make their own things sell better. If you take the way of delivering goods first and then collecting money, you can still earn an exchange rate difference after RMB depreciation.

However, the depreciation of RMB is not good for people engaged in import trade, which will increase the import cost. For businessmen engaged in import trade, if the increase in import costs is to be passed on to consumers, the cost of buying these imported goods will increase and things will not be sold.

If it is a shareholder, this situation will also be affected. I heard from my colleagues this morning that when I woke up, the RMB quietly depreciated and the stock fell again. Therefore, the depreciation of RMB will affect investors' income.

Finally, I want to say that no matter which way leads to currency depreciation, Yang Ma also said that she will continue to adopt a prudent monetary policy, increase counter-cyclical adjustment, stabilize the exchange rate and support stable economic growth.

According to the information I have checked, there is a lot of room for tools in the policy box of the central bank at present. If the exchange rate is still constrained, it is not excluded to start raising the foreign exchange risk reserve ratio, the foreign exchange deposit reserve ratio, the offshore market central bank bill and start the countercyclical factor. So, don't panic, just look at it correctly.