Challenge: Monetary Policy Is In A Dilemma

Huatai Securities said February

The uncertainty lies in the contradiction between the pressure of RMB devaluation and the anticipation of market reduction. If the central bank releases liquidity through MLF, PSL and other directional tools, rather than a comprehensive reduction, then the stock market is still a shock pattern in the context of tight market liquidity.

CITIC construction investment report pointed out that in 2014, with the

The establishment of devaluation and two-way fluctuation expectations, and the deficit of capital and financial items, especially financial items, began to manifest.

Deficits in capital and financial projects, together with current account surpluses, have led to slower growth in foreign exchange reserves, and even decline in individual quarters.

The new foreign exchange reserves continue to shrink, so the monetary policy framework is also undergoing pformation, providing the basic currency through new channels.

Overall, economic pformation brings about a series of changes in exchange rate, foreign exchange and monetary policy.

Actually, from this year

In terms of operation, it is more likely to release liquidity by sequel MLF (medium term lending facility) and reverse repurchase.

In February 3rd, the central bank in the open market will carry on 35 billion yuan 7 days reverse repurchase operation, 55 billion yuan 28 days reverse repurchase operation, a total of 90 billion liquidity to the market.

The "big move" such as cutting interest rates and lowering standards has not appeared.

Wen Bin said that taking into account the trend of foreign exchange reduction, from the perspective of the supplement of the basic currency, the reduction is necessary.

However, since the capital market soared after the end of last year, the central bank has been cautious about the overall easing policy.

In particular, if China joins the "currency war", it will further increase the depreciation expectation of RMB.

"However, whether the reverse repo, MLF or even after the cycle of innovation tool MLF has been extended to more than a year, the problem of the basic money supply gap can not be solved."

He said.

Yang Chi, head of the strategic Office of Huaxia Bank Development Research Department, told the economic reference daily that under the background of capital outflow and RMB devaluation, the growth rate of central bank foreign exchange growth slowed down or even decreased, which provided a good condition for the central bank to improve the initiative of monetary policy.

The operation of the central bank in the debt side will be reduced and the intervention in the foreign exchange market will be phased out.

The operation at the asset side will increase, more directional control tools will be launched, and liquidity will be adjusted more actively.

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Although the spot exchange rate rose in February 3rd, there was no sign of the end of the devaluation since the end of last year.

In February 2nd, the spot exchange rate of RMB against the US dollar fell below the 6.26 integer pass in early trading, reaching a minimum of 6.2603, a discount rate of 1.984% over the middle price, and only one step away from the 2% limit line.

Data show that the RMB to us dollar exchange rate has reached a high level from the end of October 2014, and is accelerating its path of depreciation.

This year, the yuan has fallen by 1% against the US dollar, continuing the decline in November last year.

Since November last year, the RMB has depreciated by 2.4% against the dollar.

Wen Bin said that since the reform, the RMB effective exchange rate of the bank for International Settlements has risen by 50%, and the nominal exchange rate of RMB against the US dollar has risen by 32%. Since 2013, the central bank has begun to use the phrase "achieving equilibrium" frequently in some public statements.

"If only from the current account point of view, the proportion of China's current account surplus to GDP has dropped from 10% in 2007 to 2% to 3% at present. According to this level, the level of RMB exchange rate is appropriate.

But the change of capital account can not be ignored. Since 2015, China and the US economy will enter a new big cycle. The United States is entering the cycle of gradual economic improvement and increasing interest rates, and China is entering the new economic normal growth rate and the cycle of interest rate reduction. Under this cycle, the attractiveness of RMB assets will decline.

He said that the renminbi will be systematically reassessed, and the direction of revaluation is depreciation.

Many industry experts believe that in the context of exchange rate marketization, market forces dominate this round of depreciation, but the central bank will not allow the exchange rate to depreciate. No matter what happens, the central bank will always try to stabilize its expectations through the middle price.

"The market and the central bank are looking for a revaluation point. At present, the wait-and-see atmosphere is relatively strong."

Wen Bin said.

The report of the strategic planning department of the Agricultural Bank of China pointed out that our country has nearly US $4 trillion in foreign exchange reserves, and the policy control space and room for maneuver are larger.

If the fluctuation of the RMB exchange rate is too large, the central bank's moderate regulation in the critical period can still play an important role in "42 allocation of thousands of pounds" and stabilizing market expectations.

However, investors on the stock market are not so rational.

The rapid devaluation of the renminbi has triggered violent turbulence in the capital market.

WIND statistics show that during the week from January 26th to January 30th, the Shanghai Composite Index fell continuously, and the 5 trading days dropped 4.22%.

A more serious blow to the A share market is the increase in the uncertainty of the central bank's monetary policy easing.

In the past, it was widely expected that the central bank would implement quasi reduction or even cut interest rates in the near future, and the sharp depreciation of the RMB against the US dollar had upset this expectation: the Central Bank of China is becoming more and more in a dilemma in easing the pace of monetary policy. Once the rate is cut sharply, it will accelerate the depreciation of the RMB and accelerate the withdrawal of arbitrage capital.