As of 10:00 PM on March 11, the onshore and offshore RMB exchange rates had rebounded to the 7.23 range, hitting 7.2278 and 7.2280 respectively. This marks a recovery of about 600 basis points from 7.29 since early March. Hong Kong bank foreign exchange traders indicate that the RMB exchange rate has mainly been influenced by two factors: firstly, the increasing attention on Wall Street towards the "Trump recession" leading the US dollar index to drop to a yearly low of 103.32; secondly, the rise in Hong Kong's Hang Seng Tech Index and US-listed Chinese stock prices has attracted more foreign capital inflow into Chinese assets, thereby bolstering market optimism for the RMB's strength.
Although Trump's trade protection policies still exert some pressure on the RMB exchange rate, the sentiment for shorting in the forex market has nearly disappeared. Recently, US Treasury yields fell to 4.23%, reducing the China-US interest rate spread to 229 basis points, prompting overseas quantitative funds to significantly cut their RMB short positions. These factors indicate that RMB assets are becoming a new safe haven for global capital, supporting the RMB exchange rate's resilience.
Moreover, as the risk of a US economic recession increases, Wall Street investment firms are beginning to reduce their US dollar and stock holdings, opting instead to invest in various global currency assets, further supporting the RMB exchange rate. Positive ratings by international investment banks on Chinese tech stocks have also attracted substantial capital inflow into the Chinese market, providing new support for the RMB exchange rate. It is estimated that over the next 12 months, approximately $200 billion will flow into Chinese stock assets.
