The Risk Of A Weakening Renminbi Is Accumulating.

The first focus of the global economy in 2015 is still the continued recovery of the US economy, thereby pushing the fed to raise interest rates and appreciate the US dollar.

The Japanese economy is still deep in deflation quagmire, and the European economy has yet to shake off the shadow of the European debt crisis. The BoJ and the European Central Bank will continue to implement stimulant measures.

Against the backdrop of monetary policy differentiation between Europe and the Bank of Japan and the Federal Reserve, the US dollar is expected to continue to rise with the advantage of spreads.

As the US dollar enters the interest rate cycle, the renminbi faces the expectation of cutting interest rates.

Therefore, it is estimated that the value of RMB will continue to depreciate in 2015, which will be within the controllable range of 5%.

In 2014, the US dollar gained about 13% of the other currencies in the basket index (Euro, yen, sterling, Canadian dollar, Swedish kronor and Swiss Franc). The annual performance was the strongest in 1997, and according to most major banks, this is only a prelude to the further rise in 2015.

In 2015, the Fed is expected to raise interest rates, while Europe and Japan are still implementing the stimulus monetary policy, which will become the main background of the global foreign exchange market throughout the year.

The recent robust economic data also reinforced the view that the US economy is improving enough to allow the fed to consider raising interest rates in 2015.

However, it is not clear whether the further strengthening of the US dollar in the first half of this year will help to weaken the prospect of raising interest rates by the Fed.

Many people also worry about the increasingly turbulent atmosphere in emerging markets.

Moreover, political instability may again threaten Greece's position in the euro zone, which has also exacerbated investor concerns about economic growth and the global financial system.

The euro fell against the US dollar in 2014, the biggest annual decline since 2005.

In order to save the euro zone economy, the ECB lowered its benchmark interest rate to 0.15% in September 4th last year, and the overnight deposit rate dropped to 0.20%, and announced a large-scale asset purchase plan.

This year, about 65% of the global currency market is likely to enter an increase in interest rates, while the euro, which accounts for about 33% of the global currency market, still struggles at the lowest interest rate and is difficult to extricate itself from the mire.

Recently, the Greek ruling coalition failed to get enough votes to elect the president, bringing the country's politics into a new turmoil.

The market is worried that the Greek leftist radical coalition party will win the 2015 general election, which will disrupt Greece's plan to get international aid.

On the first trading day of the new year, the euro reached a low of 1.2047 near the US dollar, the lowest since July 2012. It was almost the same as the value of the euro before the financial tsunami, and the gap between the US dollar and the euro was very small.

The US dollar rose against the yen in 2014.

In particular, when the Bank of Japan announced an expanded stimulus package at the end of 10 to prevent inflation expectations from falling, the US dollar rose more rapidly.

Teppei Ino, an analyst at MITSUBISHI bank in Tokyo, believes that the overall trend of the US dollar against the yen in 2015 is likely to increase.

"If I want to ask if the US dollar will fall to 100 yen or rise to 130 yen, I prefer the latter," he added, but the fact that the market position has already prepared for the further weakening of the yen may help to ease the rise in the US dollar to the yen, and if Greece's doubts intensify, the yen may get a short-term boost.

But in addition to the Japanese yen's continued depreciation of the US dollar, the Japanese economy has yet to see any glimmers of deflation in recent 20 years.

The collapse of Russia's rouble, triggered by the economic and financial upheaval, was the most amazing scene in the international financial market at the end of 2014.

Unlike in 1998, it was a link between financial currencies and subprime lending, and this is Russia.

Oil and natural gas and other energy resources have been changed because of the reshuffle of the international energy market and emerging energy countries.

This also makes Chinese management unable to guard against it: supporting Russia is like letting the Chinese use high priced oil to help; without supporting Russia, will Russia bring disaster to China after its deep deterioration?

What deserves special attention is that the RMB exchange rate has not followed up for nearly half a year after the appreciation of the US dollar, but this situation can not be sustained, which will accumulate more and more troubles.

It can be said that the RMB has reached the crossroads at the strategic turning point.

The GDP growth rate of China's economy is moving down step by step, while the US economy is in a new period of rising growth. China will cut interest rates while the United States needs to raise interest rates.

RMB

It's a long process. It may take decades or more.

Therefore, we must not overemphasize the appreciation of RMB internationalization. The current appreciation of RMB has overdrawn the future.

The depreciation and appreciation of all currencies between countries is nothing but to enhance the competitiveness of the country's monetary liquidity and expand the space for its economic development.

Therefore, the renminbi depreciates moderately before the Fed raises interest rates, or it can open up the space for the strategy of future appreciation or depreciation.

In addition, from the perspective of medium and long term strategy and globalization, the benchmark interest rate of RMB is too high. The benchmark interest rate is 5.6%, the largest among the major powers, far higher than the US dollar 0.25%, the euro 0.15%, and the yen 0.01%. It is extremely unfavorable for China's enterprises, capital and RMB to participate in international competition, and it is not good for all real economies such as China's main real estate industry, steel industry, and so on, nor is it good for the banking industry.

The high cost of physical industry in China is related to the high benchmark interest rate of the RMB.

December 21st vice president of the central bank,

In the "2014-2015 China economic annual conference", the Secretary General Yi Gang said that since 2014, the US dollar is the strongest, and the renminbi is the second largest in the world, and the real effective exchange rate has shown appreciation.

This is exactly the opposite path of the US dollar against the euro and yen, and the renminbi actually appreciates along with the US dollar, but this situation can not be extended for a long time. This may lead to bigger disparity and balance with a package of international currencies.

There are two reasons that cause the marketization rate of RMB to be too low, and the share of the US dollar in the RMB exchange rate is too large. The other package of international currencies is too low to be shown in the basket of currencies, and the RMB is still not shackled from the "planned economy", and is running according to "rule by man".

Over the past two years, China's economy has been weakening.

In the case of weak growth, low inflation and the devaluation of the currencies of the neighboring countries, especially the sharp depreciation of the yen, the strength of the RMB trade weighted exchange rate is particularly significant.

In view of the possible slowdown in China's economic growth in the first quarter of 2015, the risk of RMB weakening is accumulating.

In the recovery of internal and external balance, the emerging market currency weakness continued to 2015.

The risk of RMB depreciation will rise in the first half of 2015 as a result of the economic slowdown and the sharp narrowing of the trade surplus caused by the lunar new year.

The slowdown in the economy will be unfavorable to the short-term outlook of the renminbi. Given the strength of the US dollar, the yuan may fall to 6.25.