Yesterday, Bank of China announced central parity of RMB against USD reported 6.8102, once again above 6.80, 122 basis points lower than the previous day.
On Tuesday, RMB central parity broke 6.80 mark (to 6.7980) for the first time. Considering this, forex market share the view that Bank of China’s emphasized “bilateral wave”signs may have been explicit.
Simply speaking, RMB central parity may be interpreted as the “official guidance price” of RMB forex rate by Bank of China, which reflects the RMB spot (cash) transaction price respectively needed by banks. The daily fluctuation is within 0.5% around this guidance price.
However, some forex dealers argue that RMB forex rate volatility is a purposeful act by Bank of China to restrain forex speculation and large-scale intentional inflow of hot money. It is also possibly a method adapted by the Bank of China to learn how to deal with the volatile fluctuation of forex market, for RMB is expected to become global currency with full convertibility ultimately.
In the two days, global forex market, which has been following the lead of Chinese forex rate, seems to be dying down.
Yesterday, the dollar reported 6.6640 yuan against one- year RMB NDF at 17:35, and reported 6.6500 yuan at close.
The euro and the high-yielding currencies are on the defensive, for the recent rally, driven by the rising risk appetite, seems to be ceasing. Optimism brought about by China’s restart of currency reform is also fading.
Edited by Ikonfx
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Ikonfx: Full Flexibility of RMB in the Rally and Crash
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amandalanlulei
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