How Fed rate impact on RMB exchange rate? Many analysts expect that RMB exchange rate will continue to stabilise.

Beijing time June 15 at 2 am, the Federal Reserve raised interest rates 25 basis points, the federal funds rate from 0.75%~1% increasing to 1%~1.25%. Many analysts believe that the Fed raised interest rates for RMB exchange rate fluctuations will not be too great.

First, the markets have been on the hike to form consensus, effects early release. The end of May, central parity of RMB against the US dollar introduction of “countercyclical factor”, middle price 6.87 per cent before rising to 6.79. Essentially makes the Central Bank more discretion guide the RMB exchange rates moving in one direction.

Second, long-term stability in China’s economic development has not changed and will still be able to exchange good support. Released on June 7, data show that until May 31, the scale of China’s foreign exchange reserves of US $3.0536 trillion, rally for the fourth consecutive month. In addition, with the domestic financial market adjustments, inside and outside the wider spreads also supported by exchange rate.

Third, This accelerating trend of the internationalization of RMB will not be significantly affected by Fed rate hikes. The European Central Bank said in a statement a few days ago, by selling dollars in the first half of this year, a total increase of equivalent value RMB 500 million foreign exchange reserves. This is the first time the ECB includes RMB in foreign-exchange reserves, a move that also helped the RMB exchange-rate short-term stabilisation.

Looking to the future cross-border flows of the whole situation, the safe official said, overall, the current cross-border capital flows stabilized well, keep a basic balance of supply and demand of foreign exchange in the external environment remains, especially because the economy continues to run at a reasonable interval based on more solid, middle price of RMB exchange rate formation mechanism and constantly improve, within the main foreign income and expenditure will be more rational.