The Financial Times of the people's Bank of China warned on the 16th that temporary measures should be taken to stabilize the market if necessary to prevent hot money from coming in and out. The comments of the state media have rocketed. According to news from the Chinese fund sector, the authorities may temporarily cut the exchange amount to $10,000 in order to prevent residents from running out of the full-year quota of 50,000 US dollars for foreign exchange purchases in January. Residents may even suspend foreign exchange purchases next month, with other bankers speculating that the full-year quota could be halved.
At the beginning of the new year, the quota of 50, 000 US dollars per person per year for foreign exchange purchase was updated. Sheng Songcheng, a central bank counsellor and former director of the investigation and Statistics Department, said last week that residents were considering asset allocation and preservation in the context of the renminbi depreciation expectation. May focus on buying foreign exchange at the beginning of the year, further aggravating the pressure to devalue the renminbi. As a result, the authorities consider measures to limit the use of a "once-in-one" amount of foreign exchange purchases.
China's central bank's Financial Times on the 16th quoted a number of experts as saying that the Fed rate increase has an impact on the renminbi and that more attention should be paid to exchange rate changes in the coming period. In order to monitor the capital flow, especially to prevent the disturbance of hot money, temporary measures must be taken to stabilize the market expectations if necessary because of the pressure of RMB devaluation still exists for a period of time.
Foreign exchange settlement deficit increased 1.7 times
Industry sources said that the January restriction on residents to purchase foreign exchange in stages, or even cancel the quota of foreign exchange purchases is a special decision at a special time. Due to the arrival of the mid-term exchange early next year, combined with the concentration of cash needs during the Spring Festival, the end of the year and the beginning of the year's pressure on the capital market.
November figures are expecting unabated funding pressures. In November, banks posted a 1.7-fold monthly deficit of 186.1 billion yuan (renminbi) on behalf of customers, the highest since March, according to the latest data from safe. Safe said the pressure on cross-border outflows in November had increased from October but was still below the level it had in the same period before the Fed first raised interest rates in 2015.
Safe data also showed that the bank's foreign exchange deficit in November was 228.4 billion yuan, significantly larger than last month's 98.4 billion yuan, a deficit of 17 months in a row. Analysts pointed out that the data reflect the rapid depreciation of the renminbi, resulting in a desire to buy foreign exchange more hot.
Safe said the recent strengthening of the dollar has had a big impact on global currencies and international capital flows, but the renminbi has depreciated relatively little against the dollar and has remained largely stable against a basket of currencies. Some positive factors in cross-border capital flow continue to play a role, can better adapt to the changes in the external environment.
The renminbi hit a new eight-year low against the dolla
According to a number of data, year-end capital outflow pressure continued. China's foreign exchange reserves fell $69.1 billion, or 2.2 percent, on a month-on-month basis in November, falling for the fifth consecutive month, to their lowest level since March 2011. The central bank's foreign exchange share fell by 382.7 billion yuan a month at the end of November, the biggest decline since January and the 13th consecutive month of decline.
In addition, the dollar rate increase led to another 14-year high in the US exchange rate index, while the renminbi fell continuously. The onshore renminbi (CNY) fell through the 6.96 mark on the 16th, reaching a low of 6.9612, another 8-and-a-half-year low, continuing to approach the "7-count" level. CNY closed at 6.9583.CNY on the night market. The FOB price is weaker than the FOB price and continues to hang upside down. FOB (CNH) fell nearly 200 cents a day to 6.9528 on the night market, lower at 6.9559 on the 16th.
Affected by the dollar interest rate increase, China's bond market has fluctuated sharply in recent days, affecting a number of inter-bank bond issuers.
According to statistics, between December 14 and 15, a total of 13 enterprises, such as Zhongji Group, Chenming Paper and China Salt Industry, cancelled or postponed the issuance of bonds with a cumulative amount of twelve billion seventy nine million nine hundred and ninety nine thousand nine hundred and ninety nine yuan. The 13 companies cancelled or postponed bond issuance for roughly the same reason, all due to recent market volatility, a follow-up will be a chance to re-issue.
