If the dollar cuts interest rates, how much will the yuan rise? Will it appreciate quickly to break 7? What happens if the appreciation breaks 7?
In the past two days, the US dollar interest rate cut has occupied the headlines, the appreciation of the yuan, and the sharp rise in Chinese assets has followed, which has also been on the hot search. So what kind of trends do we see next? Will this be our chance to reverse United States? Is the Sino-US financial war really over?
Let's take a look at the US dollar interest rate cut, what kind of results have the RMB and Chinese assets achieved in the past two days? Is this worth blowing about?
Yesterday, affected by the US dollar's interest rate cut, the RMB exchange rate rose sharply, and the offshore RMB exchange rate once rose by more than 300 basis points, approaching the 7.06 mark, hitting a 16-month high since May 2023.
This morning, the onshore and offshore yuan exchange rates continued to rise, both rising above 7.06 and reaching an intraday low of 7.0538.
At the same time, A-shares also opened higher and higher, with more than 4,600 stocks rising in the two cities, and the transaction volume quickly enlarged to 629.4 billion yuan, a new high in the past half a month.
At the same time, the dollar index also fell sharply below 100 at one point, and then slowly recovered above 100, closing at 100.67 yesterday, and it seems that it will fall below 100 sooner or later.
This wave of RMB rise, from about 7.27 at the end of July, all the way to the current 7.06, this kind of rise has not been seen for a long time, it can be seen that the dollar tide is indeed the sickle of the world's foreign exchange market, and it is still very sharp.
The dollar will continue to cut interest rates, and it seems that the appreciation of the RMB above 7 is already in sight?
So, what will happen if the renminbi appreciates rapidly and breaks 7? 3 things are destined to happen.
First, the accelerated flow of international capital into the mainland has pushed China's stock market higher, real estate is expected to stabilize, and China's capital market has returned to prosperity.
Second, the purchasing power of the renminbi has increased, which will boost our confidence, boost consumption, and promote China's economic growth.
Third, the renminbi appreciates too quickly in the short term, which is not conducive to exports.
The appreciation of the renminbi, many people are worried about exports, but this is only a short-term phenomenon, after a period of stability, if the renminbi exchange rate no longer fluctuates greatly, exports will come back.
There are three important factors in this.
First, our export advantage has not only relied on price, but also comprehensively improved the comprehensive cost performance.
Second, even if we only look at prices, our advantage is still very large, and the appreciation of the renminbi is not enough to reverse the export advantage.
Third, the exchange rate has an impact on exports, but it is fundamentally in the demand for Chinese goods, and as long as the real demand is strong, the impact of the exchange rate will be very limited.
The above three things are actually talking about the general trend, there may be twists and turns in the short term, and the United States may also engage in sabotage, but the general trend must go this way, this is an objective law, not manpower can stop it.
Since the situation is so good, can the Sino-US financial war be declared over? Will the situation between China and the United States be reversed?
Let's expand on this question a little bit.
In the past two days, the dollar has finally cut interest rates, and many people are very excited and running to tell each other.
Yesterday I saw a particularly interesting video of a delivery boy riding a bicycle and shouting: The dollar has finally cut interest rates, and then there was applause.
Many people believe that the US dollar interest rate cut means that United States admit defeat, marking the end of the financial war between China and the United States and the victory of the United States.
In fact, the great power competition may be more entangled than the eight-year War of Resistance Against Japanese Aggression, and it belongs to the long-entangled mode of protracted war.
To put it bluntly, we cannot expect to knock down United States all at once, let alone expect them to collapse tomorrow.
Historically, great power competition has been a long process of time, at least 50 years or more.
How many years have we been with United States now?
It has only been 14 years since 2010, when China's economy surpassed Japan and became the world's second. If we count from 2014, when purchasing power parity GDP surpassed United States, it is only 10 years.
In fact, United States' total manufacturing output surpassed United Kingdom in 1894, and GDP surpassed United Kingdom around 1910, but it was not until after World War II that United States became a true global hegemon.
Therefore, it is better for us to also count from the year when real GDP surpasses United States, which has not yet arrived, and it was originally expected to be 2030, and now it seems that it may not be realized until about 2035.
Understanding this principle, when we look at today's topic, we will have a sense of enlightenment.
Therefore, the conclusion is very clear, the great changes unseen in a century have been irreversible, and the general trend of the two curves of rising in the east and falling in the west remains unchanged, and will continue to develop along this path.
So how long does this process take?
If we look back at 2030 in 10 years, 2024 may be a landmark year for the reversal of the situation.
In this way, the entanglement and difficulties we have experienced in the past few years are the darkness before the dawn.
We must have the self-confidence of a great power, but we must not be blind.