Two-way exchange rate fluctuations are the norm, and enterprises should establish the concept of "risk neutrality".
Release time:
2021-06-10 15:57
Source:
People's Bank website
On May 27, 2021, the seventh working meeting of the national foreign exchange market self-discipline mechanism was held in Beijing, which concluded that the current foreign exchange market is generally balanced. In the future, there are many market and policy factors that affect the exchange rate, and the RMB may appreciate or depreciate. No one can accurately predict the exchange rate. Whether it is short-term or medium-term, exchange rate uncertainty is inevitable, two-way fluctuations are the norm, whether governments, institutions or individuals, should avoid being misled by the forecast conclusions. A managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies is suitable for China's national conditions and should be adhered to for a long time. Under this exchange rate system, the exchange rate cannot be used as a tool, neither devaluation to stimulate exports, nor appreciation to offset the impact of rising commodity prices. The key is to manage expectations and resolutely combat all kinds of malicious market manipulation and malicious creation of unilateral expectations. Both enterprises and financial institutions should actively adapt to the state of two-way exchange rate fluctuations. Enterprises should focus on their main business, establish the concept of "risk-neutral", avoid deviating from risk-neutral "foreign exchange speculation" behavior, and do not bet on the appreciation or depreciation of the RMB exchange rate.
Enterprise, Exchange Rate, Market, Depreciation, Appreciation, Foreign Exchange Market