The RMB exchange rate against the US dollar has appreciated significantly

From the recent trend, the RMB exchange rate against the US dollar has appreciated significantly. On February 21, the RMB exchange rate against the US dollar was adjusted up by 16 basis points to 7.1696, and the central parity rate on the previous trading day was 7.1712.

However, just a few days ago, the decline in the offshore and onshore RMB exchange rates attracted market attention. On February 17, the onshore exchange rate opened at 7.2450, and the highest intraday price reached 7.2424, the highest since February; the offshore RMB exchange rate remained strong, reaching a high of 7.2425.

Based on the performance of the RMB exchange rate, Wang Qing, chief macro analyst of Orient Securities, said that the appreciation of the RMB exchange rate in the past two days was mainly due to the sharp narrowing of the interest rate gap between the United States and Europe, the downward trend of the US dollar index, and the passive appreciation of major non-US currencies including the RMB to a certain extent. On February 20, the US dollar index fell sharply, falling below the 107.00 mark and hitting a 10-week low. The current exchange rate is trading around 106.50.

From the news perspective, on February 18, the People’s Bank of China issued the second and third central bank bills of 2025 through the Hong Kong Monetary Authority’s Central Moneymarkets Bond Bidding Platform. The interest has entered the value date.

Experts analyzed that whether it is the latest China Monetary Policy Implementation Report for the fourth quarter of 2024 released by the central bank or the People’s Bank of China’s issuance of 60 billion yuan of central bank bills in the open market, they are sending clear signals of stabilizing the exchange rate. In addition, the improvement in risk appetite in the financial market has promoted a rebound in the RMB exchange rate against the US dollar.

Experts said that there are still uncertainties in the global economy. If geopolitical risks intensify, the RMB exchange rate may fluctuate to a certain extent. Wang Qing frankly said that in the short term, the trend of the US dollar will become the most important factor affecting the RMB exchange rate. Given the great uncertainty in the pace of the introduction of the new US government’s trade policy and the extent of tariff increases, the US dollar index will continue to fluctuate sharply for some time to come. This means that the probability of continued appreciation of non-US currencies such as the RMB against the US dollar is not high, and the wide fluctuation process is expected to continue for some time.