Commentary: RMB Below 6.2 Red Line Is Not Terrible.

The large red currency of P > renminbi has crossed a large red line.

But the other side of the red line may not be so scary.

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In the past few weeks, < p a > //www.sjfzxm.com/news/index_c.asp > RMB > /a > the stable and value-added situation of the year has been interrupted. < href= >

Today, the spot rate of RMB against the US dollar has fallen below 6.2.

Insiders have warned that if the yuan falls below this level, it will trigger additional margin in the investment products account, which may lead to a more unstable RMB exchange rate.

These products were bought when the renminbi was stronger, when many people thought that the renminbi could only appreciate further.

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Less than P, most of the structural products are sold to Chinese export enterprises to avoid loss of revenue < a href= "//www.sjfzxm.com/news/index_c.asp" > US dollar < /a >.

The risk is that some enterprises are borrowing and operating. They are not hedging risk, but more like speculation.

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< p > Morgan Stanley once estimated that the scale of the market was as high as 350 billion US dollars and then revised to 150 billion US dollars.

Such products will expire within two years, which means that there will be no large scale centralized payment.

In addition, Deutsche Bank said that, taking into account the decline in the renminbi began weeks ago, some investors have begun to liquidate and avoid risks.

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< p > uncertainty has increased people's concern about < a href= "//www.sjfzxm.com/news/index_c.asp" > China's economy < /a >.

In February, house price growth slowed to its lowest level in several months.

The debt default of Zhejiang xingrun Real Estate Investment Co., Ltd. is even more worrying that the long-awaited burst of the real estate bubble is approaching.

China's domestic banks declined sharply in February, suggesting that speculative capital inflows are drying up.

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< p > however, the monetary authorities in Beijing still control the situation.

They are precisely using this market pains to squeeze out speculators.

Policymakers are dissatisfied with the so-called "hot money" inflow, which increases their difficulty in managing domestic liquidity and money supply.

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< p > recently, the Central Bank of China [micro-blog] has been lowering the central parity of RMB every day.

The central bank also announced that the floating range of the RMB exchange rate around the central parity price will be expanded from 1% to 2%, suggesting that the Central Bank of China will allow the fluctuation of RMB to expand further.

On Wednesday, the decline of the yuan was more than 1% over the middle price for the first time, which means that the expansion of the floating range is not just a lip service.

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< p > the Chinese government believes that even if there are serious problems in the structural products of RMB, it will not have a widespread impact on the economy.

If the government becomes worried, the central bank may enter the market any time to push the renminbi up again.

The Chinese government can easily monitor foreign exchange speculators who are struggling with pain, which is the key to the problem.

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