The pressure on RMB exchange rate depreciation is mainly gradual: Close to regulators: Prevent the risk of exchange rate overshoot

Summary：Industry insiders believe that the pressure on the RMB exchange rate to depreciate against the US dollar is mostly short-term and gradual. The US dollar index has strengthened for eight consecutive weeks. The interest rate differential between China and the US continues to reverse. The RMB exchange rate will rise during the summer months as demand for foreign exchange increases, such as cross-border travel and education abroad. There is a certain pressure for depreciation in the short term. There is a solid basis for the RMB exchange rate to remain fundamentally stable in the medium and long term. Industry experts analyze that the Federal Reserve's interest rate hike is nearing its end and external pressure is expected to gradually decrease. Domestic supportive policies are accelerating and effective, economic fundamentals are improving, and the RMB exchange rate has a solid foundation to maintain basic stability at a reasonable and balanced level. "Our country has the confidence, conditions and ability to maintain the smooth functioning of the foreign exchange market." The People's Bank of China has rich experience of past exchange rate reactions and has sufficient foreign exchange reserves, a source close to the regulator said. We will continue to monitor the market in the next stage, and cyclical and unilateral actions must be decisively corrected to prevent the risk of overshooting the exchange rate.
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