Recently, the renminbi has begun to strengthen as monetary easing in major developed countries around the world has improved trade and China's economy has bottomed out. The trading volume of RMB buying began to increase gradually in November 2012, and the trend of RMB against the US dollar is also setting new records one after another. According to data from the

Foreign Exchange Trading Center, judging from the overall performance of the RMB in the spot market yesterday, it continued the recent appreciation momentum. The US dollar fell rapidly against the RMB after the opening. As of 13:09, it reported to 6.2218, setting a new low again. According to foreign media reports, this exchange rate also hit the lowest price in 19 years. The yuan fell back against the dollar after surging higher and finally closed at 6.2262.

A New Round of RMB Appreciation Tide?

Last year, the RMB exchange rate fluctuated violently, the RMB exchange rate against the US dollar experienced three stages of narrow fluctuations, depreciation and re-appreciation, the two-way volatility hit a new high since the exchange rate reform, and market appreciation and depreciation expectations alternate.

From the perspective of the trend of change, starting from the end of July last year, the renminbi changed its weakness in the first half of the year, and the pace of appreciation accelerated significantly. In November last year, the spot exchange rate of RMB against the US dollar hit the upper limit of 1% in 20 days of 22 trading days; since this year, the exchange rate of RMB against the US dollar has risen slightly in the fluctuation.

Mei Xinyu, a researcher at the Institute of International Economic and Trade Cooperation of the Ministry of Commerce, pointed out that multiple factors have caused the current appreciation of the renminbi, including: the soft landing of China's economy has become more obvious, and optimism about China's economic expectations has risen; the U.S. fiscal cliff has passed, global Market risks have declined.

Political Commissar Lu, Chief Economist of Industrial Bank [Weibo] pointed out that the current trend of the RMB exchange rate is mainly due to market transactional reasons, not fundamental reasons, because it is the same as in the past, regardless of how the RMB spot market changes. The forward market is depreciating.

"Mainly due to the reversal of the RMB exchange rate against the US dollar at the end of August last year, there was a sudden appreciation. A large number of US dollar positions were generated that needed to be closed out, and due to the daily volatility limit, the daily US dollar positions could not be closed out, resulting in a large accumulation of US dollar positions, which caused a large number of RMB/US dollar exchange rate rises and stops in November last year." Lu political commissar said.

Lu Zhengwei pointed out that the market will return to calm after the current excessive US dollar positions are closed, while the US dollar positions in trade make the RMB lack a fundamental for continued appreciation in 2013.

Bank of Communications chief economist Lian Ping previously pointed out that changes in market expectations contributed to this round of RMB appreciation.

"As China's economy stabilizes and recovers, the trade surplus expands, and the price inflection point has passed, the expectation of RMB depreciation has decreased, while the introduction of quantitative easing monetary policy in the United States has strengthened the expectation of US dollar depreciation." He pointed out.

From the external environment, the new round of international monetary quantitative easing competition has also affected this round of appreciation. Wen Bin, director of the Institute of International Finance of the Bank of China, also believes that the trend of international capital flowing to emerging market economies such as the Asia-Pacific region is obvious, which brings certain pressure on the appreciation of the RMB.

Exchange Rate Trend Two-way Fluctuation

According to statistics, since the RMB exchange rate reform in 2005, the RMB has appreciated by about 5% against the US dollar every year. In recent years, the appreciation has slowed down, reaching about 3.63, 4.7 and 1.02 respectively in 2010, 2011 and 2012.

Market participants had raised speculation at the end of last year that the RMB exchange rate had moved from a unilateral appreciation to an equilibrium range. The recent Central Economic Work Conference proposed to "maintain the basic stability of the RMB exchange rate". This statement set the tone for the trend of the RMB exchange rate in 2013.

The market generally predicts that the RMB exchange rate will rise slightly this year, appreciating by 1% to 2%, driven by capital inflows triggered by China's rapid economic growth.

More than experts predict that on the basis of the central bank's continued implementation of a prudent monetary policy and the recovery of the domestic economy, the RMB exchange rate will maintain a limited and moderate upward trend this year. Two-way fluctuations will remain the most significant feature of the RMB exchange rate for some time to come. Liu Ligang, chief economist of ANZ Bank, said that in the process of RMB appreciation for seven consecutive years, the nominal appreciation rate of RMB against the US dollar has reached 25%, while the actual appreciation rate has reached 30%. The renminbi, which is close to the equilibrium level, is unlikely to continue to appreciate significantly, with the renminbi expected to appreciate by about 1.5 per cent in 2013.

Lian Ping pointed out that a small and steady appreciation of the RMB is conducive to China's access to low-cost resources, is conducive to the implementation of the "going out" strategy, and thus is conducive to China's medium-and long-term economic development.

Impact of RMB Appreciation on Non-ferrous Metals Related Industries:

Zhang Ming, Associate Researcher of the Institute of World Economics and Politics, Chinese Academy of Social Sciences: The RMB appreciation this year will be between 2% and 3%, lower than the previous two About 5% in the year.

If the RMB continues to appreciate, it will have an impact on non-ferrous metal-related industries:

1. Foreign exchange liability industries will obviously benefit, mainly the trading industry. Since trading enterprises have more foreign exchange liabilities (especially US dollar liabilities), the appreciation of the RMB will bring exchange gains and losses to these industries.

2. Imported industries of raw materials or components will also benefit, mainly including iron ore imports, cars (some important parts imports), crude oil imports, and other industries. Since these industries need to import related raw materials and components every year, the appreciation of the renminbi will reduce the costs of these industries to a certain extent.

3. The investment goods industry will also be sought after by certain funds, mainly including real estate with land value, park development and other industries, coal with resource value, non-ferrous metals and other industries. Due to the small appreciation, foreign funds are likely to gain appreciation gains from investing in land or real estate owned by companies in these industries, thereby increasing the attractiveness of funds to these investment industries and triggering price increases.

4, the traditional export advantage industry is directly affected, including home appliances, machinery and other products. Due to the rising costs brought about by the appreciation of the RMB, the profit margins of these industries will decline, but only 2% of the appreciation will have little impact. Through cost compression and appropriate price transfer, companies in these industries, especially leading enterprises, will have a strong ability to resist risks.

5. Industries with international pricing will be affected to a certain extent, including non-ferrous metals with full international pricing, petrochemical, steel, electronic components and other industries with partial international pricing. As the product prices of these industries are greatly affected by international prices, the appreciation of RMB will reduce their selling prices when they are priced in RMB, resulting in a decline in profits.

6. Industries substituted by imported products will also be adversely affected, including automobiles, construction machinery, steel, and home appliances. The competition between the products of these industries and foreign imported products is fierce, and the appreciation of the RMB will lead to a decline in the quotation of foreign imported products in RMB, which will make the competitiveness of local products decline to a certain extent, and then affect the profitability of these industries.