Analysis of future RMB exchange rate trends
1. New policies
On May 6, Premier Li Keqiang chaired an executive meeting of the State Council to study and deploy key tasks for deepening economic system reform in 2013, including:
(3) Steady introduction of market-oriented reform measures for interest rates and exchange rates, Propose an operation plan for RMB capital account convertibility.
At the end of May, a research report with central bank background, “Strategic Layout for Opening up to the Outside World under the New Situation,” was widely circulated in the market. It recommended: formulate and publish a roadmap and timetable for RMB convertibility, and make it clear that RMB convertibility will be achieved by the end of 2015. exchange.
2. Changes in policy mix
Current: “Governed floating exchange rate system” + “Capital account controls”.
The future: “Free floating exchange rate system” + “capital account convertibility”.
How to transition?
On May 29, the International Monetary Fund announced in its “Article 4 Discussions with China” that the RMB is moderately undervalued relative to a basket of currencies.
The main method of returning to the equilibrium exchange rate: trial and error method.
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