According to a research report by Guotai Junan Securities, in the second half of the year, considering the increasing factors stabilizing the exchange rate, the depreciation trend of the Renminbi (RMB) may be approaching its end, and it is anticipated that the RMB exchange rate will strengthen in the fourth quarter.
In terms of market sentiment, there are several factors: First, the interest rate differential between the US and China may converge in the fourth quarter. As the Federal Reserve’s rate hikes approach their conclusion and domestic interest rate cuts stimulate economic support, the convergence of the US-China interest rate differential will favor capital inflows, thereby being beneficial for the RMB exchange rate. Second, stable exchange rate policies are being formulated. Third, seasonal forex conversion in the fourth quarter may provide support for the RMB exchange rate.
In terms of fundamentals, with the introduction of a series of policies promoting continuous economic recovery and improvement by the National People’s Congress and the National Development and Reform Commission, the medium- to long-term factors supporting the RMB exchange rate are gradually emerging.
