Jumped 200 points! Offshore RMB breaks through the 7.2 level

On Monday, October 20th, the Chinese yuan experienced a frenzy. The offshore yuan against the US dollar rose by about 200 points in the short term, breaking through the 7.2 level and reaching 7.2063, the highest level since August. The onshore yuan also rose slightly. Earlier, data from the China Foreign Exchange Trading Center showed that the central parity rate of the yuan against the US dollar was raised by 116 points to 7.1612, the highest level since August. Guojun Securities believes that behind the appreciation of the yuan, in addition to external factors such as expectations of the end of the US Federal Reserve's interest rate hike cycle, the main credit goes to the central parity rate, which acts as a "stabilizer" in the foreign exchange market and provides strong support for the yuan in the context of lower costs for shorting the offshore yuan. In a research report released last week, Guojun Macro Zhou Hao and Sun Yingchao pointed out: "The financing cost of the offshore yuan has started to decline significantly, which means that the cost of shorting the yuan has also declined synchronously. However, the offshore yuan has not depreciated as some investors worried, but instead has experienced a strong appreciation due to the recent weakness of the US dollar. Guojun Securities believes that the central parity rate plays the role of a "stabilizer". As the central parity rate of the yuan against the US dollar has remained relatively stable, the bears are still cautious about the policy intentions and are not easily betting in this area. Instead, they hope to wait for clearer signals. At the same time, traders familiar with the seasonal patterns of the yuan will know that the yuan tends to strengthen in the last two months of the year, which may be related to the settlement habits of many enterprises."