On November 15, the central parity rate of the RMB against the US dollar continued to depreciate from the previous trading day to 7.1992 yuan per US dollar, the lowest value since September 11, 2023.
Zhang Di, a macroeconomic analyst at China Galaxy Securities, pointed out that in the short term, the critical position of the RMB exchange rate against the US dollar may be around 7.30.
If it comes to this position, the People's Bank of China may take counter-cyclical adjustment actions, resolutely correct pro-cyclical behavior, prevent the market's unilateral expectations from self-reinforcing, and keep the RMB exchange rate basically stable. The central parity rate hit a 14-month low. On November 6, after the Republican presidential candidate Trump won the 2024 presidential election, the US dollar index rose 1.92% to 105 points.
After experiencing a brief rise in early November, the exchange rate of RMB against the U.S. dollar fell significantly on November 6. The exchange rate of onshore RMB against the U.S. dollar fell 554 points to 7.16; the exchange rate of offshore RMB against the U.S. dollar fell more than 1,000 points within the day, falling below the 7.20 mark. . Since then, the exchange rate of RMB against the US dollar has fluctuated significantly.
On November 12, the onshore RMB exchange rate against the U.S. dollar was 7.24, down 0.67% from the previous trading day, and the closing price fell below the "7.20" mark; the offshore RMB exchange rate against the U.S. dollar fell below the 7.23 and 7.24 marks during the session, setting a new low since early August.
From November 6 to November 15, the central parity rate of RMB against the U.S. dollar depreciated by 999 points in total. As the market's expectations for the Fed's rate cuts cooled and inflation expectations rebounded, the U.S. dollar index strengthened. As of November 14, the U.S. dollar index had risen for five consecutive days, once rising by more than 107 points, the first time it has stood above the 107-point mark since November 1, 2023.
According to the purchase price of US dollars at a state-owned bank on November 15, 7.22, compared with the exchange rate of 7.15, the small business owner of Zhejiang Province can get an additional RMB 3,500 for the approximately US$50,000 payment. The depreciation of the RMB is beneficial to export enterprises, but not to import enterprises and students studying abroad.
A Chinese student studying in the United States told the Economic Observer that he had noticed the recent depreciation of the RMB and was glad that he had purchased foreign currency a month ago.
He purchased 20,000 US dollars on October 22, which cost him RMB 142,800. If calculated based on the bank's selling price of RMB 7.25 on November 15, he would have to spend RMB 145,000 to purchase 20,000 US dollars. Purchasing foreign exchange in advance saved him RMB 2,200.
Unlike the small business owners mentioned above in 2018, who wanted to wait and see for a while and wait for the exchange rate to reach around 7.30 before considering whether to settle the exchange. First of all, China may be more prepared this time.
Since 2024, against the backdrop of a set economic growth target, relatively strong external demand has played an important role in driving growth. Second, the Federal Reserve is still in an easing cycle for some time. The Federal Reserve's monetary policy cycle is different from that in 2018, and the interest rate cut cycle is generally beneficial to non-US currencies.
Third, the stabilization policy of the People's Bank of China may support exchange rate expectations. RMB exchange rate expectations have remained generally stable since 2024, and the stabilization policy has played an important role in this.
Exchange rate trend On November 14, the Office of the Chief Investment Officer of UBS Wealth Management said that it had raised its forecast for the US dollar against the RMB to 7.30 (December 2024), 7.40 (March 2025), 7.50 (June 2025) and 7.50 (September 2025); previously, it was 7.20, 7.00, 7.00 and 7.00. In the medium term, the risk of RMB against the US dollar may be biased to the upside, although this may manifest in a phased and gradual manner.