The slight adjustment and depreciation of the central parity rate of the Chinese yuan against the US dollar, coupled with two-way fluctuations, have become the main tone of the market

1、 Minor adjustment and depreciation: rational correction after strong appreciation

This mid price adjustment is a short-term technical adjustment, not a trend shift. Since April, the RMB/USD exchange rate has continued to strengthen, rising from 6.9025 at the beginning of the month, with a cumulative appreciation of nearly 400 basis points, reaching a nearly three-year high at one point. After continuous rapid appreciation, there is a demand for periodic correction in the market, and the middle price has slightly adjusted downwards, which not only conforms to the changes in supply and demand in the foreign exchange market, but also effectively smooths out the unilateral appreciation rhythm and avoids the formation of excessive speculative expectations.

From the perspective of pricing mechanism, the middle price follows the formation rule of "closing price of the previous trading day+changes in the exchange rate of a basket of currencies". The 41 basis point adjustment this time is mild in magnitude and has a clear signal, which is a reasonable response to the short-term trend of onshore and offshore markets, reflecting the central bank's management philosophy of "adjusting based on market supply and demand and referencing a basket of currencies".

2、 Core logic: Balanced calibration under the interweaving of internal and external factors

The adjustment of the middle price this time is a market-oriented calibration under the joint action of multiple internal and external factors. On the external front, the US dollar index has recently experienced a temporary rebound, coupled with intensified volatility in the international financial market, resulting in a slight increase in demand for safe haven US dollars and a temporary suppression of non US currencies. Internally, the domestic economy is steadily recovering, but the rapid appreciation of the RMB in the early stage has to some extent increased the exchange rate pressure on export enterprises. A moderate correction is conducive to alleviating the operational pressure on foreign trade enterprises and balancing the development of domestic and foreign demand.

At the same time, the fundamentals of the domestic economy remain stable, with the resilience of foreign trade highlighted and the trade surplus continuing to expand in the first quarter. Foreign capital steadily flows into the Chinese stock and bond market, providing solid support for the RMB exchange rate. The strong demand for seasonal foreign exchange settlement by enterprises in April and the abundant supply of US dollars in the foreign exchange market have determined that there is no basis for significant depreciation of the Chinese yuan. The small adjustment and depreciation this time is essentially a precise regulation by the central bank to guide the exchange rate back to a reasonable equilibrium and avoid unilateral polarization.

3、 Market outlook: Normalization of two-way volatility, stable tone unchanged

Looking ahead to the future, the main tone of "two-way fluctuation and stable operation" of the RMB exchange rate will continue to strengthen. On the one hand, the positive recovery of the domestic economy, sufficient resilience in foreign trade, and balanced cross-border capital flows constitute the core support for the RMB exchange rate; On the other hand, the Federal Reserve's fluctuating monetary policy expectations, international geopolitical fluctuations, and global capital flows will continue to exacerbate short-term exchange rate volatility.