What's Going On With The Strengthening Of The RMB?

The latest exchange rate data at 0:29 am on June 26 showed that the US dollar was 7.1699 against the RMB, which was slightly lower than yesterday. This may not seem like a big deal, but it actually shows that the overall trend of the RMB is strong.

Why has the RMB strengthened again recently? The main reason is that the US dollar has fallen. The Federal Reserve released a signal of interest rate cuts, and the market understood it as soon as it heard it. The US dollar may no longer be tight, and capital will naturally flow out, which will push up the RMB.

In addition, the domestic economy is performing well, exports are stable, and domestic demand is slowly recovering. As the overall data goes up, the RMB will naturally have confidence. Once this happens, the confidence value of the RMB will immediately go up.

What use is this exchange rate to us?

To put it bluntly, the exchange rate has different effects on different people.

If you are engaged in foreign trade exports, you have to be careful when the RMB appreciates. For the same batch of goods, the amount of US dollars received in RMB will be less than before. If the exchange rate rises sharply, the profit can be reduced.

On the contrary, if you are engaged in imports, then this wave is considered "picking up a bargain". For example, if you import machines from Germany and parts from Japan, the RMB appreciates, and your purchases are more cost-effective, and the savings are profits.

There are also families studying abroad. When exchanging foreign currency, the RMB appreciates, and you can use less money to exchange for full tuition and living expenses. At this time last year, exchanging 100,000 RMB could only be exchanged for about 13,800 US dollars, but now it can be exchanged for more than 13,900. Don't look at this small difference. You can save thousands of dollars in four years of studying abroad.

How to read the middle price, and what is its reference value?

Many people have heard of the "middle price", but they don't know what it is. In fact, this is a benchmark price set by the central bank every day, which is based on the market transactions of the previous day plus some adjustments.

Today's middle price shows that 1 US dollar is equivalent to 7.1668 RMB, which is not much different from the market quotation. This price is mainly used as a reference for banks and enterprises when they settle and purchase large amounts of foreign exchange, and it can also reflect the tendency of policy regulation.

If you see that the middle price fluctuates suddenly one day, it is likely that there is a policy signal in it, or it is affected by a major international event. For example, if the Federal Reserve suddenly cuts interest rates or global oil prices plummet, these can lead to significant changes in the RMB middle price.