RMB cash flow related financial product, but the lack of large

Posted by admin on January 11, 2011 under Forex Online | Be the First to Comment

Recently, the SAFE announced the second batch of illegal foreign exchange business, the list of five banks, including the real estate business for two banks as capital settlement, leading to hot money inflows property market.

Coincidentally that outside investors for the Chinese A-share market’s attitude has changed. If the aperture according to the broader observation, then: to exclude foreign exchange trade surplus and FDI in diameter, to measure into the territory of hot money, hot money for the A share market investment ideas, although once the pre-crisis “on the left of transactions” to After the crisis, “the right deal”, but recently, again from the “right” to “left” shift: September 2010 to 11 months, the hot money of the 3-month moving average monthly increment of 17.2 billion U.S. dollars, respectively, 398 billion dollars and 470 billion U.S. dollars, have been restored to pre-crisis levels, while the A-share market over the same period was from 9 to 11 points in early 3100 near the end of 2400, and since the crisis erupted, the hot money is to keep the same basic stock the same direction (from March 2008 to August 2010 between). Therefore, changes in the flow of hot money has been clearly expressed recognition of China’s future economic growth and optimism in the Chinese capital market.

Today, the process of internationalization of RMB is advancing at an unprecedented rate, after just 3 months after the pilot, the SAFE announced that from January 1, 2011 from the implementation of export earnings in the country outside the store, which means there is a real trading background stranded outside the yuan does not exist any policy barriers; the same time, although the People’s Bank also held last August to allow foreign investment in domestic legal RMB inter-bank bond market, but the qualifications required to obtain approval of regulators. As a result, virtually the yuan “going out” and “flow back” to form a twisted bar between: on the one hand, under the double surplus year after year, China’s monetary environment has been alienated to the hedge position can only be passive, the RMB has not just a macro to frame the pool, so do go out as necessary; the other hand, the expected appreciation of the renminbi and foreign interest rate under the regulators within the channel for RMB return trade-off, and always tied to real trade in this inhibition in 2011, work session, the central bank once again stressed the need to “widen the yuan in the cross-border trade and investment in the use of steady flow and the return channel widening yuan, to gradually establish and improve the RMB cross-border payment and settlement network and strengthen cross-border payment of RMB Monitoring. ”

The twist in this bar is below even the normal channels have been alienated: for example, offshore renminbi in Hong Kong market, there are a number of domestic enterprises is difficult to finance, by way of composite bonds (that is, the RMB-denominated dollar settlement, which investors can enjoy the benefits of appreciation of the renminbi) to obtain funds, but the cost of such financing will be relatively high, about 10%, the face of such a high cost, capital can only be entered in the short termreal estate, capital markets, and some areas of high-yield funds to make profitable, and investors and financiers of nature while avoiding disadvantages, but further back to the regulators for the yuan more cautious attitude. For example, recently the central bank has made it clear there is no client companies in Hong Kong, the case of cross-border payments of RMB to trade is defined as no real background support, are violations.

China’s rising economic status in the world, the natural result of the yuan so popular these days, the result is the accumulation of a huge flow of renminbi funds, but the flow of funds, the relative lack of financial products, not to mention the establishment of an offshore yuan market. Therefore, the real solution to the problem of hot money, I am afraid that as soon as possible to the existing “screw bar” stroked along, of course, this requires more wisdom and greater courage.

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