On the 27th, the RMB exchange rate, which had been trading sideways for many days, fell sharply during the intraday session, setting a new low since April. As of the afternoon of the 27th, the onshore renminbi fell more than 200 points within a day, the lowest hit 6.5133; offshore yuan fell below the three barriers of 6.49, 6.50, 6.51, the lowest hit 6.5210.

On July 28, the onshore RMB exchange rate against the U.S. dollar fell nearly 50 points at the opening, approaching the 6.51 mark. At the same time, the offshore RMB against the U.S. dollar fluctuated higher and rose above the 6.52 mark. As of 9:37, the onshore and offshore renminbi were quoted at 6.5063 and 6.5166 against the U.S. dollar, respectively.

From the perspective of industry insiders, risk aversion in the market is heating up, affecting the performance of the capital market and triggering fluctuations in the RMB exchange rate. For some time, the global financial market has entered a hedging mode. As a result, the U.S. dollar continued to strengthen and the U.S. bond maturity spread continued to narrow. Since late June, the U.S. dollar index has continued to rise, once standing above the 93 mark, approaching the high point at the end of March; 10-year U.S. Treasury yields once fell The 1.2% important barrier was broken. During the same period, the RMB exchange rate maintained a two-way volatility trend, and the overall trend remained stable. Among them, the latest CFETS RMB exchange rate index against a basket of currencies is 98.7, a new high since 2016.

At a time when global risk appetite declines and risk assets fall, the pressure on RMB exchange rate depreciation will increase. Supported by the high demand for foreign exchange settlement, the pressure for short-term adjustment of the RMB exchange rate is controllable.

This week, the Fed's July meeting will be the focus of market attention. If the Fed continues its “hawkish” position, market risk aversion may rise again and push up the U.S. dollar; if the Fed takes into account the potential uncertainty of a rebound of the epidemic and continues its easing position, then the risk sentiment in the financial market will become stronger. The US dollar may enter a downward wave.