GUANGZHOU (Fund China) – The RMB exchange rate accelerated its plus pace quickly again boosted by the RMB appreciation at the end of this year. The RMB to dollar reference ratio plus 0.5% (the largest range approval by the exchange ratio policy) to 7.3696 compared 7.3696 in Friday, below 7.34 with a single day incresed 0.35%, the second largest margin since the exchange ratio reform. The RMB exchange rato this year is duplicate to last year.

Some traders said the exchange ratio 7.3696 means the Central Bank are testing the currency market, the single day’s RMB to dollar exchange rate margine would reach 0.8% next year which may stimulate the expection of the RMB appreciation. Meanwhile, the sixth interest plus shows the central bank would like to release the inflation pressure via accelerating the appreciation.

There are 4 trading days remained untill the end of this year, the RMB to dollar exchange rate still has a chance to breake and below 7.30, and there is a great expection for RMB appreciation next year. The RMB NDF reached 6.75665/6.7665 yesterday, that means the expected scope for the RMB appreciation in the next 12 months will be from 8.35% to 8.51%, coincidently, the Viet Nam central bank published an announce that the Vietnam Dong to dollar exchange rate floating zone will expand from 0.5% to 0.75%.

Copyright Fund China 2009.

You Might Like: