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Capital outflows after pressure relief The yuan quietly devaluation not do more harm than good

The British retreated after the referendum, the yuan is quietly. This round of devaluation is not just against the dollar, the dollar against the yuan central parity rate is more than 6.68, the RMB exchange rate index whether CFETS also fell below 95. After the capital outflow pressure relief, depreciation of positive affect the need to pay attention to.

In Britain after the referendum, the pound and the euro against the dollar, because of the RMB exchange rate pricing mechanism is closing rate + a basket of currencies, the yuan against the dollar. At the same time, the central bank guided the yuan against the dollar in the middle price downward, to reduce exchange rate volatility against non-us currencies. So the devaluation of the yuan against the dollar and the RMB exchange rate index both can be seen as a passive, as well as too.

But the depreciation did not trigger a capital market turmoil, its reason is various. First of all, China's financial authorities to strengthen controls on capital outflows, China enterprise dollar debt also most settled in at the end of last year, so now there is no depreciation pressure mass outflow of capital and then to the assets of severe situation. Second, Britain after the referendum, the European market risk to rise, the dollar hedge attributes while highlights, but probability of years by the federal reserve raising interest rates decline, the market is no longer fear the fed raising interest rates, so the capital out to seek safety motivation also fell. Finally, the people's bank of China released moderate stop renminbi devaluation will, such as the requirements with its clients to carry out the business selling forward remit overseas financial institutions to pay foreign exchange risk reserve of this effect is limited but would enhance the offshore market short yuan cost, signal meaning is more apparent.

In addition to the above reasons, market expectations are also made corresponding changes. It is thought that the yuan is likely to be led by the financial authorities actively, because before the global financial environment is not suitable for depreciation, depreciation will bring great negative impact, the wider communication with the outside world after China, struck the pound, the euro and the British, European easing expectations have increased, the federal reserve to raise interest rates expected subsided, depreciation of conflict has been greatly reduced. When considering the steady economic growth demand in China, the currency devaluation seems to be the interest of the Chinese economy.

This idea is just speculation, there are currently no corroborate from any official caliber, but in terms of the result seems to is logical flow, even if China does not have the initiative.

So happened in many free exchange rate the devaluation of the interests of developed countries, gleaming in the China. Before this, China's foreign currency fluctuations and capital outflows, largely because not resolutely implement mondale triangle theory, now once the short-term strengthen capital controls, the exchange rate issue will hard to on asset prices and the impact of the financial system. Look from the external environment, depreciation is caused by The Times, from the internal environment, walter mondale capital controls are more firmly locked in triangle, then exchange rates and interest rates have been more degrees of freedom.

The disadvantages of devaluation is suppressed, began to highlight benefits. Cicc, for example, home appliance industry research report on the second half of a devaluation promoting export recovery, everbright securities (601788, shares) in textile apparel industry research report expected depreciation short-term good export-oriented cotton spinning enterprise, the bank of China international chemical industry research report that depreciation good export-oriented companies. Market expectations conform to the changes in the yuan depreciation has been optimistic.

May keep basic stability of RMB exchange rate, overall weak external demand, export situation so Chinese may not seen positive signs. In June and July is depreciation and exports improved, whether the time window, the optimistic about the emergence of real data are needed to confirm. If is the release of economic data showed exports more than expected in June, the devaluation leads to export to improve expectations will increase, export-oriented listed company earnings forecast is likely to appear.

Although weak external demand to limit exports appear particularly big difference, but the yuan's positive influence in this mundane economic and market environment, may also be a bright spot.