1. Continuous depreciation of RMB RMB depreciates continuously and falls back to the era of 6.6 yuan:

According to the China Foreign Exchange Trade System (CFETS) authorized by the People's Bank of China (PBOC), the central parity rate of RMB against us dollar in the inter-bank foreign exchange market will be 6.6177 yuan on April 29, 2022. It dropped 549 basis points from the previous day to 6.6 yuan.

In addition, the onshore and offshore RMB exchange rate against the U.S. dollar has also come to 6.6 yuan era.

RMB short-term depreciation pressure may continue!

There are many reasons for the recent depreciation of the RMB exchange rate, among which the most immediate factor is the continuous "hawkish" signals from the Federal Reserve, which leads to the increasing expectation of further interest rate hikes.

Against this backdrop, the DOLLAR index and Treasury yields both rose, with the DOLLAR index surpassing 100 for the first time since May 19, 2020. The strength of the DOLLAR index has put pressure on non-US currencies and the offshore RMB exchange rate has therefore come under downward pressure.

In the short term, the depreciation pressure of RMB may continue, but in the medium and long term, the possibility of continuous unilateral depreciation of RMB exchange rate is unlikely. The reason for this is that China's economy and financial sector remain resilient and dynamic, the fundamentals of long-term sound growth will not change, and there is no basis for a sharp depreciation of the RMB exchange rate against the backdrop of a double surplus in international payments.

Other Asian currencies have fallen against the dollar recently. On April 28, the Singapore dollar traded at 1.3856 against the U.S. dollar. It has also fluctuated since February and closed at 1.3418 on February 9. Yen/USD traded at 130.9645 on Apr. 28. The yen has depreciated faster since March, closing at 114.8350 on March 4. The won's decline has accelerated this month, closing at 1209.1650 on March 29, after hitting 1272.3250 on April 28.