原创 2016-03-18 季天鹤央行观察

人民币稳定格局更加稳固，联储的宽松将助长中国的通胀并提升利率水平。

汇率

外汇储备在2月小幅下降285亿美元，除此之外央行当月增持74亿美元黄金和70亿美元的IMF头寸。而同期，央行外汇占款下降2300亿人民币，其他国外资产增加2400亿人民币。我认为外汇占款下降和其他国外资产增加并不意味着央行把一种国外资产转变为另一种国外资产，因为把一种国外资产转变为另一种国外资产不影响人民币，因此不会影响央行外汇占款。

而且，外汇占款需要涉及到两个主体，因为无论外币还是人民币都是主体A在主体B的存款，央行不可能自己就给自己创造了外汇占款，这个操作必须要涉及银行。所以更有可能的是，央行外汇占款的减少和其他国外资产的增加是两件事情，比如银行把一些在央行的人民币存款变为外币存款。

结售汇类数据对于解释央行外汇占款的帮助恐怕有限，因为结售汇表示的是一种操作过程，而外汇占款则是结果。比如，银行自身售汇后汇出，会导致央行外汇占款减少且在央行的存款规模减少。但如果银行自身售汇后以外汇存款的形式在央行持有，则在导致央行外汇占款减少的同时，增加央行的其他国外资产，并且在央行的存款总规模应该不变。

央行其他国外资产增加，或许会是从央行角度看的藏汇于银行/从银行角度看的央行带持外汇。银行可以直接持有国外资产，比如2016年1月银行就增持了1100亿元人民币等值的国外资产。另一种方式就是银行通过人民银行间接持有外汇，正如储户不直接持有美元纸币而是通过持有境内银行的外币存款间接持有美元纸币一样。

这样，2015年8月央行其他国外资产锐减和银行当月其他国外资产锐增，就是银行从间接持有外币变成了直接持有外币，而2016年2月的话则可能是银行间接持有外币增加。这方面更细致的讨论，欢迎参考我在2月26日发表的《外汇占款消失后我们看什么？》一文，其中对于结售汇以及外汇占款进行了非常详尽的讨论。

当然，在未来，央行其他国外资产还可能有另外一种可能，就是央行的境外人民币贷款/股权，这当然也算是国外资产，但肯定不算是外汇占款，因为外汇占款同时要有外汇和人民币两面，而人民币贷款只有一面。不过在目前，我们还看不出人行进行了这方面的操作，没有关于这方面的消息，但这个方向的前景是广阔的。

从跨境汇款方面来看，2月外币净流出700亿人民币等值，人民币净流出1300亿等值，都是1月份流出额的一半左右。而且，2015年11月和12月，外币流出大于本币流出，而此前本币都是流入的，只有外币在流出，因此2016年1月和2月人民币净流出连续超过外币净流出，而且规模都是外币的近乎2倍，反映出市场有了新的变化。

在过去，人民币流出的主要原因是人民币升值，因此境外主体乐于接受人民币，尽管人民币利率在离岸非常低。但现在，离岸市场利率水平高于在岸成为驱动人民币流出的新动力。而外币流出相对人民币在跨境收付中的比重下降，意味着人民币套息交易经历了“赚升值+赚高利率”阶段以及“纯赚升值”之后，现在升值也不确定，利差也较小，市场观点分化，一边倒的局面不再，基本面方面的因素将开始发挥更多作用。

此外，我们能看到市场主体在境内持有外币的行动正在持续。2月代客结售汇差额是净购汇2300亿元人民币等值外汇，但流出的外币仅700亿人民币等值，意味着剩余的外币都在境内。考虑到境内外币存款增加54亿美元，境内外币贷款继续减少86亿美元，可见140亿美元（910亿人民币）的购汇都在境内运转，并没有离开。剩下的净购汇大概在做别的事情。

这完全符合我在2月6日发表的《居民购汇是否消耗外汇储备？》中提到的“外汇存款余额不因还贷和对外汇出而减少，反而因居民购汇而增加”的判断。现在境内短期外汇贷款余额已经较去年6月底下降了三分之一，这是非常惊人的。未来这个进程有可能继续持续，但下降速度会继续放慢。

此外我们还要问，如果流出的外币只有700亿人民币等值，而央行外汇占款下降了2300亿，那么央行多减少的那部分外汇去了哪里？如果按照前面的思路，那么差出来的1600亿应该是一部分被银行直接在境外持有，一部分被银行间接在央行持有。相比之下，央行其他国外资产增加2400亿似乎规模又有点太大了。我们只好等待2月的其他存款性公司概览给出答案，或许银行国外资产会有下降。

除了即期之外，我们还能看到远期结售汇签约在2月也从1月的银行售汇1620亿人民币降至银行售汇400亿，意味着市场对于人民币未来的走势确实出现分化，而且远期结汇签约的规模在1月和2月都在230亿元左右，但远期售汇签约则从1860亿下降到623亿，这应该不能简单地用风险准备金来解释，因为1月的1860亿比12月的1400亿还大。

利率

央行声称逆回购到期将自然对冲纸币回流，但我们发现2月纸币仅回流央行1000亿，2月底的流通中货币仍然比去年12月底多出来9000亿。与此相对，逆回购以及更广义上的对其他存款性公司债权也不降反增600亿。本来央行的如意算盘是等纸币回流了，逆回购也可以自然到期，但没有想到的是纸币没有在2月回流，于是逆回购也必须不停续做了。

直到229宣布降准之后，央行才开始让逆回购自然到期。但我们发现，央行让逆回购自然到期的规模远超过降准能够释放的空间。从3月1日到3月17日，逆回购净回笼流动性12400亿，而降准释放的空间恐怕只有7000亿左右的水平。这意味着，纸币回笼真正发生的时间应该是在3月上旬。不过，考虑到2月流通中货币减少3105亿元，而央行口径的纸币回流只有1000亿，这说明有2100亿纸币存留在银行的金库里，或许会和新回流的纸币一起在3月回到央行。

在信贷收支方面，我们看到对非银行业金融机构贷款继续下降至7400亿，距离去年6月底的4300亿越来越靠近。在存款方面，住户存款猛增20000亿元，而企业存款则减少15000亿，反映出企业发红包还是很给力的。此外，非银行金融企业在银行的存款也增加了8200亿，意味着居民又重新进入了股票、基金等市场。

在债券方面，我们首先回到1月份。在1月我们知道银行对非金融企业和机关团体的人民币贷款增加了20000亿，人民币和外币总计则是18000亿。但令人惊讶的是，从债权的口径来看，银行对非金融机构的债权仅增加7000亿。在对个人的贷款和对其他居民部门债权的角度，1月份两者都是增加6000亿水平。

这意味着，银行在1月份应该抛出了不少非金融机构的债券。但这个数据又是债券托管数据上无法反映的，因为托管数据总体反映银行还是增持了信用债。与之相对的是银行对其他金融机构债权在其他存款性公司概览里面是增加32000亿，规模也很大，但在信贷收支中的非银行业金融机构贷款口径下无论是规模还是增量都完全不匹配。

从信贷收支的口径来看，银行的债券投资是下降467亿。从托管量来看，中债登方面银行减持债券1100亿，但应该主要受国债到期量大于新发行量影响。基金类机构仍然是买入的主力，达到420亿。在上清所方面，银行买入的主要是同业存单，剩余项目总体减持242亿，而非法人机构则增持845亿同业存单外的债券。

在目前债券价格处于高位、收益率处于低位的时期，银行减持债券给基金和理财是非常妙的策略，让广大投资者承受低利率/资产荒的不舒适，而让自己获得债券价格上涨的资本利得，并用这一利得对冲不良贷款拨备计提造成的利润下降，以及由于高利率政府债务被低利率地方债券置换所带来的利润下降。

3月展望

由于欧洲央行会议和美联储会议总体均维持宽松的基调，因此人民币汇率方面受到的支撑较多。3月份人民币总体走向强势，而且在岸-离岸价差转正，在这样的情况下，3月的外币流出可能会非常有限，甚至重现去年10月净流入的景象，而与之相对的央行外汇占款也很有可能转正。

当然，转正的进程还要看商业银行的情况。有可能商业银行继续增加对外汇的增持力度，导致央行外汇占款继续下降，但如果考虑央行和银行整体，则外汇头寸可能呈上升的态势。境内银行负债侧的外币存款将会继续增长，资产侧的外币贷款规模继续下降，但变化幅度都会因人民币贬值压力大幅减小甚至短期进入升值空间而缩小。

3月的外汇市场运行非常良好。我们回想1月份就能清楚地记得，那个时候央行中间价在贬值方向跑了几天之后强力稳住，于是1月份的每日中间价连起来就是一根直线，而且在岸价距离中间价很远。到了2月春节回来之后，由于2月初联储放出了宽松信号，人民币强力升值，随后非常平稳的贬值，同时中间价和在岸价差距缩小。

随后在3月，人民币中间价震荡升值，同时有涨有跌，而在岸价也随之波动，两者价差非常紧密。而如果我们观察离岸和在岸的关系，我们看到1月份离岸和在岸价差非常大，但在2月下旬起价差也开始变得紧密。在岸的舞步虽然还有点踉跄，但毕竟开始走起来了，3月10日晚欧洲央行发布会时，在岸居然也走出了一个贬值后重新升值的小尖峰，让人有了一种G7货币的错觉。

此外，我们还能看到，离岸汇率在目前越来越按照在岸的走势在走，特别是追随中间价在波动。从机制上讲，离岸市场本来可以完全不理会中间价，或者说在一定程度上理会但依然我行我素，但从目前来看，离岸市场对中间价的追随还是相当紧密的，这并不是说离岸市场真的要盯住中间价，而是目前中间价动-在岸动-离岸动这种机制已经发生作用。

目前的问题有两个。首先，在人民币贬值压力极度缩减的情况下，前几个月的紧急措施是否还要持续。或者说，当市场重新开始追捧人民币的时候，是否又要重新把过去防止外币流入的措施找补回来？在这方面，大的方向肯定是毋容置疑的，也就是努力让市场自求平衡，另外我们也应经看到，当市场快速转向时，跟不上形势的行政措施反而会帮倒忙。2013年外汇局的存贷比规定出台就赶上了tapering，就是一例。

第二点是，目前盯住的篮子的波动机制，是否能够真的满足市场的需要。目前，当美元弱其他货币强的时候，人民币也对美元走强并对其他货币走弱，而当美元走强其他货币走弱的时候，人民币也对美元走弱并对其他货币走强。这种机制固然意味着人民币会对所有货币产生波动。但人民币走势除了其他货币之外，还受到中国自己的影响。

中国自己的政策可能会导致人民币对所有货币走强或者走弱，但在目前盯住篮子的情况下，人民币自己一侧的情况似乎有被忽视的风险，只能跟着其他货币的涨跌而起伏。同时，保持对一揽子货币的基本稳定，并不能消除数量上的流入和流出，因为这种基本稳定本身其实也限制了人民币的波动范围。

当然，目前阶段的任务主要是让市场习惯波动，还没有到让市场学习“对哪个因素波动”的阶段，也没有让大家适应欧元那种开个议息会就上下翻飞2%的阶段。但这个阶段什么时候到来，目前还不清楚，可能还要盯上这个篮子一段时间，直到大家都学会了盯篮子，习惯了波动，盯篮子的问题和稳定下波动的问题开始暴露之后，再演化到下一个阶段。

而外汇的重新流入会对银行间市场造成影响。当然，在银行增持外汇资产的背景下，目前条件下的外汇流入不会全被银行在央行处结汇形成人民币存款准备金，而有可能以在央行外币存款的方式积累，银行间人民币流动性由外汇结汇导致的增长有限。但外汇渠道造成的银行间流动性减少一旦停滞，银行在满足法定准备金要求方面的唯一挑战就是信贷导致的存款创造了。

市场对于联储政策对境内流动性数量和利率水平的影响有两种看法。一种是联储政策为中国的数量宽松和利率下行政策打开了空间，另一种是联储政策缩减了中国的数量宽松与利率下行政策必要性。我认同后一种看法，因为目前我们已经看到了之前几次降息之后，无论是债券发行量还是信贷量都已经迅速扩张，大宗商品价格上行或者止跌，房地产市场重新启动，股票市场企稳，人们已经开始探讨一些房地产市场的抢购风潮。

而在今年强调防风险的基调下，人民银行非常清楚大量信贷所蕴藏的风险。如果利率继续下行，数量继续宽松，会有越来越多的首付贷和P2P类产品出现来满足大家对收益率的追逐。央行想要得到的最好结果，乃是温和的通胀、市场自行压低的利率、市场自己进行的宽松，而不是把去产能去库存搞成了大泡沫大通胀、让市场的通胀预期起来而抬高利率增加地方政府负担、并且被扣上大水漫灌的帽子。很难想象周行会用嚣张的通胀给自己的职业生涯收官。

央行在走钢丝，即在通过通胀抬高产品价格来去库存并利用产能，和维持低利率水平降低企业利息开支之间寻求平衡，在这种情况下它需要市场的配合，即市场依然热衷于配置债券并压低利率水平，同时还愿意购买资产和商品。这里面当然存在一个时间差，即市场购买资产和商品的操作还没有传导到利率水平上，毕竟市场是粘性的和分割的，买债的人和买房的人未必是一群人。如果这个时间差够长，对于解决很多经济问题都很有利，但这恐怕很难。

除了通胀和低利率的时间差之外，另一个时间差就是低利率和外汇流入的时间差。外汇流入变为人民币后会购买债券资产，但同时也会购买商品，购买债券导致利率下行，而购买商品加剧通胀导致利率上行。2008年之前我们看到的就是后一种情景，即外汇不断涌入推高人民币汇率以及物价和利率水平。目前中国可能还处于上述情境的前期，即外汇涌入还不至于对汇率和物价/资产价格产生影响。

在上述各种因素的综合作用下，债券收益率走高的趋势恐怕更加不可避免。但由于作用因素是多重的，在上述因素的平衡不断变化的情况下，债券收益率走高也会是一个震荡的过程。联储的宽松政策虽然短期来看是压低债券收益率，但等联储实现了自己的物价增速目标的时候，全世界都会发现自己的物价开始上行了，之前债券收益率的低位也就只是昙花一现了。

The Renminbi's stable pattern has become even more solid, and the central bank's loose policy will promote inflation in China and elevate the level of interest rates.

Exchange Rate:

In February, foreign exchange reserves slightly decreased by $28.5 billion. In addition, the central bank increased its holdings by $7.4 billion in gold and $7.0 billion in IMF positions. Meanwhile, the central bank's foreign exchange deposits decreased by 230 billion RMB, and other foreign assets increased by 240 billion RMB. I believe the decrease in foreign exchange deposits and the increase in other foreign assets do not necessarily mean that the central bank is transforming one type of foreign asset into another. Such a transformation wouldn't affect the Renminbi and therefore wouldn't impact the central bank's foreign exchange deposits.

Furthermore, foreign exchange deposits involve two parties, as both foreign currency and Renminbi are deposits of Party A within Party B. The central bank cannot create foreign exchange deposits for itself; this operation must involve banks. Thus, it's more likely that the reduction in central bank foreign exchange deposits and the increase in other foreign assets are two separate actions, such as banks converting some Renminbi deposits at the central bank into foreign currency deposits.

Moreover, data related to foreign exchange transactions might have limited relevance in explaining central bank foreign exchange deposits, as these transactions represent operational processes, while foreign exchange deposits represent results. For instance, if a bank sells foreign currency and transfers it out, the central bank's foreign exchange deposits decrease along with the overall deposit amount. However, if the bank, after selling foreign currency, holds it in the form of foreign currency deposits at the central bank, this would decrease the central bank's foreign exchange deposits while increasing its other foreign assets. The total deposit amount at the central bank should remain unchanged in this case.

The increase in the central bank's other foreign assets might be seen from two perspectives: as foreign exchange reserves held by banks or as the central bank holding foreign exchange on behalf of banks. Banks can directly hold foreign assets; for instance, in January 2016, banks increased their holdings of foreign assets equivalent to 110 billion RMB. Another way is for banks to indirectly hold foreign exchange through the central bank, similar to depositors not holding US dollars directly but indirectly holding them through domestic bank accounts.

Thus, the sharp decrease in the central bank's other foreign assets in August 2015 and the simultaneous sharp increase in banks' other foreign assets might indicate banks transitioning from indirectly holding foreign exchange to directly holding foreign exchange. Conversely, in February 2016, the increase in banks' indirect foreign exchange holdings might have occurred. For a more detailed discussion, please refer to my article titled "What Do We Look at After Foreign Exchange Deposits Disappear?" published on February 26th, which provides an extensive analysis of foreign exchange deposits and transactions.

Of course, in the future, the central bank's other foreign assets might include another possibility: offshore Renminbi loans/equity. Although these assets are foreign, they aren't considered foreign exchange deposits, as they involve only one aspect—Renminbi loans. However, currently, we don't see any indications or news regarding the central bank pursuing such operations, but the prospects for this direction are broad.

Examining cross-border remittances, in February, there was a net outflow of foreign currency equivalent to 70 billion RMB and a net outflow of Renminbi equivalent to 130 billion RMB, both about half of January's outflows. Furthermore, in November and December 2015, foreign currency outflows exceeded domestic currency outflows, while previously, domestic currency inflows had outweighed outflows. This means that in January and February 2016, the net outflow of Renminbi continued to exceed the net outflow of foreign currency, with the scale nearly double that of foreign currency. This reflects new changes in the market.

In the past, the main reason for Renminbi outflows was Renminbi appreciation. However, now, the higher offshore market interest rates compared to onshore rates have become a driving force for Renminbi outflows. The decreasing proportion of foreign currency outflows relative to Renminbi in cross-border transactions suggests that the "earn appreciation + earn higher interest rates" stage of Renminbi carry trades has passed. With uncertainty in appreciation and smaller interest rate differentials, market opinions have diversified, and the one-sided situation is no longer prominent. Fundamental factors will begin to play a more significant role.

Furthermore, we can observe that market participants are continuously holding foreign currency domestically. In February, the net foreign exchange sales from customers amounted to a net purchase of 230 billion RMB equivalent in foreign exchange. However, only 70 billion RMB equivalent of foreign currency flowed out, indicating that the remaining foreign currency stayed within the country. Taking into account the increase of 5.4 billion USD in onshore foreign currency deposits and the ongoing decrease of 8.6 billion USD in onshore foreign currency loans, it can be seen that the 14 billion USD (91 billion RMB) of foreign exchange purchases remained in circulation domestically and did not leave the country. The remaining net purchases of foreign exchange are likely being used for other purposes.

This aligns perfectly with the point I made in my article "Do Residents' Foreign Exchange Purchases Consume Foreign Exchange Reserves?" published on February 6th, which stated that "foreign exchange deposit balances do not decrease due to repayment or outward foreign exchange transfers, but rather increase due to residents' foreign exchange purchases." The balance of short-term foreign exchange loans in the country has already decreased by one-third since the end of June last year, which is quite astonishing. This process is likely to continue in the future, but the rate of decrease will slow down.

Furthermore, we should ask, if the outflow of foreign currency is only 70 billion RMB equivalent while the central bank's foreign exchange deposits decreased by 230 billion RMB, where did the additional 160 billion RMB equivalent that the central bank reduced go? If we follow the previous line of thinking, a portion of the difference of 160 billion might be directly held by banks overseas, while another portion might be indirectly held by the central bank through banks. In comparison, the increase of 240 billion RMB in the central bank's other foreign assets seems a bit too large. We'll have to wait for the overview of other deposit-taking institutions in February to provide answers, and perhaps the banks' foreign assets will decrease.

In addition to spot transactions, we also see that forward exchange transactions decreased from 162 billion RMB in bank sales in January to 40 billion RMB in bank sales in February. This suggests that there is indeed divergence in the market's outlook for the Renminbi's future direction. Moreover, the size of forward exchange purchase agreements in January and February remained around 23 billion RMB each month, while forward exchange sales agreements decreased from 186 billion RMB to 62.3 billion RMB. This cannot be solely explained by risk reserve requirements, as the 186 billion RMB in January was even greater than the 140 billion RMB in December.

Interest Rates:

The central bank claimed that the maturing of reverse repurchase agreements (reverse repos) would naturally offset the inflow of currency into circulation. However, we found that in February, only 1000 billion RMB flowed back into the central bank, and by the end of February, the currency in circulation was still 900 billion RMB higher than it was at the end of the previous year. In contrast, reverse repos and more broadly, other deposit-taking company bonds, increased by 60 billion RMB instead of decreasing. The central bank's plan was to wait for currency to flow back naturally, allowing reverse repos to mature on their own. However, since currency did not flow back in February, reverse repos had to continue to be rolled over.

It wasn't until the reduction in the reserve requirement ratio (RRR) was announced on February 29th that the central bank started letting reverse repos mature naturally. However, we observed that the size of reverse repos being allowed to mature naturally far exceeded the liquidity space that the RRR cut could release. From March 1st to March 17th, reverse repos net drained liquidity by 1240 billion RMB, while the space potentially released by the RRR cut was likely only around 700 billion RMB. This suggests that the actual reduction in currency in circulation likely occurred in early March. However, considering that currency in circulation decreased by 310.5 billion RMB in February, and the central bank's calculated inflow of currency was only 1000 billion RMB, this indicates that 210 billion RMB in currency might be stored in banks' vaults, and it might return to the central bank along with newly returned currency in March.

In terms of credit supply and demand, we see that loans to non-banking financial institutions continued to decrease to 740 billion RMB, getting closer to the 430 billion RMB from the end of June last year. On the deposit side, household deposits surged by 2000 billion RMB, while corporate deposits decreased by 1500 billion RMB, reflecting corporations' substantial use of their funds. Furthermore, non-banking financial institutions increased their deposits in banks by 820 billion RMB, indicating that households are re-entering the stock and fund markets.

Regarding bonds, let's first go back to January. In January, we knew that banks increased their RMB loans to non-financial corporations and institutions by 2000 billion RMB, and the total for both RMB and foreign currency was 1800 billion RMB. However, surprisingly, when we look at the bond perspective, banks' claims on non-financial corporations increased by only 700 billion RMB. In terms of loans to individuals and claims on other resident sectors, both increased by 600 billion RMB in January.

This suggests that banks likely sold a substantial amount of bonds from non-financial institutions in January. However, this data can't be reflected in custody data, as it generally indicates that banks increased their holdings of credit bonds. On the other hand, claims on other financial institutions in the deposit-taking company overview increased by 3200 billion RMB, indicating a large scale. But in terms of loans to non-banking financial institutions in the credit supply and demand data, both the scale and the increase are completely unmatched.

From a credit supply and demand perspective, banks' bond investments decreased by 46.7 billion RMB. Looking at custody volumes, China Central Depository & Clearing Co., Ltd. (CCDC) data showed that banks reduced their holdings of bonds by 110 billion RMB, likely mainly influenced by the fact that the maturity of government bonds exceeded new issuances. Fund management institutions were still major buyers, with a total of 42 billion RMB. On the Shanghai Clearing House's (SHCH) side, banks mainly bought interbank certificates of deposit (CDs), with the remaining items decreasing by 24.2 billion RMB. Non-corporate institutions increased their holdings of bonds other than interbank CDs by 84.5 billion RMB.

In the current period when bond prices are high and yields are low, banks reducing their holdings of bonds is a strategic move for funds and wealth management. This strategy lets the broader investors bear the discomfort of low interest rates and asset scarcity, while banks gain capital gains from rising bond prices. This offsets the drop in profits due to provisions for bad loans and the decrease in profits resulting from the replacement of high-interest-rate government bonds with low-interest-rate local government bonds.

March Outlook:

Due to the overall maintenance of accommodative tones in both the European Central Bank (ECB) and the Federal Reserve meetings, the Renminbi (RMB) exchange rate is receiving significant support. In March, the RMB is expected to show a strong trend, with the onshore-offshore spread turning positive. In this context, the outflow of foreign currency in March might be very limited, potentially even resembling the net inflow seen in October last year. Conversely, the central bank's foreign exchange positions might also turn positive.

However, the progress of this turnaround still depends on the situation of commercial banks. It's possible that commercial banks will continue to increase their holdings of foreign exchange, leading to a continued decrease in the central bank's foreign exchange positions. But when considering the overall picture of the central bank and commercial banks, the foreign exchange positions could potentially show an increasing trend. Onshore banks' foreign currency liabilities will continue to grow, while foreign currency loans on the asset side will continue to decrease. However, the magnitudes of these changes will likely be significantly reduced due to the substantial decrease in RMB depreciation pressure or even a short-term appreciation trend.

The foreign exchange market is running very well in March. Looking back to January, it's clear that the central parity rate stabilized after a few days of depreciation, resulting in a nearly straight line pattern for daily central parity rates throughout January, with a considerable gap from the onshore exchange rate. After the return from the Spring Festival in February, due to the Fed's signal of easing in early February, the RMB saw strong appreciation, followed by steady depreciation. Meanwhile, the gap between the central parity rate and the onshore rate narrowed.

In March, the RMB central parity rate showed fluctuations with both ups and downs, and the onshore rate followed suit, with the two rates showing a very tight correlation. If we observe the relationship between offshore and onshore rates, we see that the gap between them was significant in January but began to narrow in late February. The onshore rate, although still somewhat unsteady, has started to stabilize. On the evening of March 10th, during the ECB press conference, the onshore rate even experienced a small peak of appreciation after a depreciation, giving a sense of major currency fluctuations like those of G7 currencies.

Additionally, we can observe that the offshore exchange rate is increasingly following the onshore trend, especially tracking the fluctuations of the central parity rate. Mechanically, the offshore market could ignore the central parity rate entirely or only partially consider it, but currently, the offshore market's close tracking of the central parity rate is quite tight. This doesn't mean that the offshore market is truly fixated on the central parity rate, but rather that the mechanism of central parity movement affecting onshore and offshore rates is in play.

There are currently two issues. Firstly, under the significantly reduced pressure for RMB depreciation, should the emergency measures of the past few months continue? Or when the market begins to favor the RMB again, should the previously implemented measures to prevent the inflow of foreign currency be reintroduced? The general direction is undoubtedly to let the market seek its own balance. However, we must also recognize that administrative measures that fail to keep up with market changes can do more harm than good when the market shifts rapidly, as seen in 2013 with the introduction of reserve-to-deposit ratios.

The second point is whether the current mechanism of tracking a basket of currencies truly meets the market's needs. Currently, when the dollar weakens and other currencies strengthen, the RMB also strengthens against the dollar and weakens against other currencies. However, when the dollar strengthens and other currencies weaken, the RMB also weakens against the dollar and strengthens against other currencies. While this mechanism implies RMB volatility against all currencies, the RMB's behavior is influenced not only by other currencies but also by China's own policies.

China's domestic policies could cause the RMB to strengthen or weaken against all currencies. But under the current mechanism of tracking a basket of currencies, the RMB's own dynamics seem to be somewhat neglected. It can only fluctuate alongside other currency movements. Simultaneously, maintaining the basic stability against a basket of currencies doesn't eliminate the inflow and outflow in terms of quantity. This basic stability actually limits the extent of RMB fluctuations.

Of course, the current stage's task is mainly to make the market accustomed to fluctuations. It's not yet the phase of letting the market learn "which factors cause fluctuations," nor the phase where everyone adjusts to the kind of scenario where changes in interest rates make a currency fluctuate up and down by 2% after a policy meeting, like the Euro. When this phase will arrive is unclear. It might take some time to focus on this basket until everyone learns to fixate on it and becomes accustomed to the volatility. Once the problem of fixating on the basket and stabilizing fluctuations is addressed, it will evolve into the next stage.

The re-entry of foreign exchange will impact the interbank market. Of course, under the background of banks increasing their holdings of foreign exchange assets, the inflow of foreign exchange under current conditions won't all be used by banks to convert to RMB deposits in the central bank to form required reserves. It might be accumulated in the form of foreign currency deposits with the central bank, limiting the growth of onshore RMB liquidity resulting from foreign exchange conversions. However, once the reduction in interbank liquidity caused by the foreign exchange channel stagnates, the only challenge for banks in meeting statutory reserve requirements would be deposit creation caused by credit extension.

The market has two perspectives on the impact of Federal Reserve policies on domestic liquidity levels and interest rates. One view is that Federal Reserve policies open up space for China's quantitative easing and interest rate reduction policies. The other view is that Federal Reserve policies reduce the necessity of China's quantitative easing and interest rate reduction policies. I agree with the latter view because we have already seen rapid expansion in bond issuance and credit volume after previous rate cuts. This is also coupled with a rise or stabilization in commodity prices, the reactivation of the real estate market, the stabilization of the stock market, and discussions about a property buying frenzy.

However, in the context of the risk prevention emphasis in this year, the People's Bank of China is acutely aware of the risks associated with a large amount of credit. If interest rates continue to decline and quantitative easing continues, there might be an increasing number of down payments for credit and peer-to-peer products to satisfy the pursuit of yield. The central bank's desired outcome is moderate inflation, naturally lowered interest rates, and a market-driven easing process, rather than letting the deleveraging efforts and destocking result in massive bubbles and inflation, which could raise expectations of inflation and result in increased burdens for local governments due to high-interest-rate government debt being replaced by low-interest-rate local government bonds. It's hard to imagine Zhou Xiaochuan ending his career with rampant inflation.

The central bank is walking a tightrope—balancing between using inflation to push up prices to clear stockpiles and utilize capacity while also maintaining low-interest-rate levels to reduce corporate interest expenses. In this scenario, it requires cooperation from the market. The market still needs to be enthusiastic about bond allocation and pushing down interest rates while remaining willing to purchase assets and commodities. There is certainly a time lag here. The operational timing of market participants purchasing assets and commodities hasn't yet transmitted to interest rate levels. After all, the market is sticky and segmented—those buying bonds and those buying property might not be the same group. If this time lag is long enough, it can be advantageous for solving many economic problems. But achieving this is likely challenging.

Apart from the time lag between inflation and low-interest rates, another time lag exists between low-interest rates and foreign exchange inflows. After foreign exchange inflows are converted to RMB, they'll purchase bond assets, but they'll also purchase commodities. The purchase of bonds will lead to interest rate decreases, while the purchase of commodities will intensify inflation and lead to interest rate increases. Prior to 2008, we saw the latter scenario, with continuous foreign exchange inflows driving up the RMB exchange rate, prices, and interest rates. Currently, China might still be in the early stages of this situation, where foreign exchange inflows aren't yet significantly impacting exchange rates, prices, or asset prices.

Given the combined impact of these various factors, the trend of rising bond yields is likely more inevitable. However, due to the multifaceted nature of the influences and the constantly changing balance among them, the rise in bond yields will likely be a fluctuating process. Although the Fed's loose policy temporarily lowers bond yields, once the Fed achieves its target for the pace of price increases, the world will find its prices starting to rise. The previous low bond yields will likely only have been a fleeting occurrence.