China Will Also Cut Interest Rates This Year.

David Hauner, head of cross asset strategy and economics at Bofa, pointed out in a research paper on Monday (March 27th) that even if the Fed raises interest rates according to market expectations, it is reasonable to cut interest rates in emerging markets.

The bank expects that the PBOC will also cut interest rates and cut rates this year.

China, Hungary, India, Indonesia, South Korea, Malaysia, Russia and Turkey are expected to relax their policies this year.

The bank pointed out that

Strong, but most emerging country central banks can cut interest rates because foreign exchange has limited risks to inflation and corporate balance sheets.

Bank of America Merrill Lynch expects the Central Bank of China to meet this year

The 50 base point is to reduce the deposit reserve ratio by 75 basis points.

At the same time, it is expected that there will not be a significant depreciation of the RMB because the government focuses on financial stability and structural adjustment of the economy.

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The US dollar declined slightly on Tuesday (March 31st) and remained at the top of the 6.20 pass. However, the monthly rise in Renminbi exchange rate this month is still expected to be the most significant since December 2011. The reason is that China's policy formulation has entered the market to intervene in the RMB exchange rate so as to ensure that it can become a global reserve currency on the premise of stable currency.

Zhou Xiaochuan, governor of the people's Bank of China, earlier this month called on the International Monetary Fund (IMF) to add renminbi to its basket of "special drawing rights" currency. Before that, Yi Gang, the vice president, confirmed that the central bank is in full negotiation with IMF.

On Monday, the Central Bank of China decided to reduce the down payment requirement for the purchase of second housing units. Before that, the Ministry of finance of China also introduced a 1 trillion yuan local government debt pposition plan.

All of these policies have made the market confidence in China's economic prospects strengthen again, and it is also positive for the future trend of RMB.

On Tuesday, the US dollar traded on the 6.2025 line to the renminbi, which means that the RMB exchange rate is expected to increase by 1.07% in March, making it the best currency for the US dollar this month.

Tommy Ong, an economist at DBS bank, points out that maintaining the RMB exchange rate steadily and steadily is the best way to make RMB acquire the status of the global reserve currency.

The latest measures by the Chinese government have eased concerns about the domestic financial market.

Li Keqiang, premier of the State Council of China, pointed out in his March 5th government work report that China will strive to maintain a reasonable and balanced exchange rate of RMB and expand the international use of the renminbi.

In March, the central parity of RMB was raised by 0.09%, ending the two decline in 0.46% consecutive months. During that period, the US dollar index rose 2.3%, which means that the appreciation of RMB against non US currencies is more significant.

Since then, IMF will adjust the composition of SDRs in a basket of currencies in October. If the yuan is to be elected as soon as possible, then the status of China's second largest economy in the world will be further recognized, and the hegemony of the US dollar will be challenged.

However, Bernanke, the former chairman of the Federal Reserve, has also expressed calm about this. He said in his speech on Monday (March 30th) that the RMB will become the international reserve currency, but it is still a long way to go to achieve this goal.

On Sunday (March 29th), Zhou Xiaochuan also said that China will further liberalize its foreign exchange supervision measures during the year.

On Monday, the Central Bank of China has lowered the down payment ratio of two housing purchases to 40%, after Zhou Xiaochuan said that China's economic slowdown has been excessive, so policymakers can then maintain the stability of economic growth through interest rate policy and quantitative easing measures.

According to the survey, the Central Bank of China will reduce the reserve requirement ratio and the interest rate of deposit and loan again in the next few months.

Liu Ligang, chief economist of ANZ bank in Hongkong, said that with the help of appropriate policies, the goal of China's economic growth reaching 7% this year will not be a problem.