Appreciation! RMB exchange rate surges, gold and silver prices soar

　　Source: China Business Journal

　　According to data released by the China Foreign Exchange Trade System authorized by the People's Bank of China,

　　It is worth noting that on May 7, the RMB strengthened sharply against the US dollar. The offshore RMB exchange rate against the US dollar broke above the 6.80 level, and the onshore RMB performed strongly as well, just a step away from breaching the 6.80 mark.

　　Regarding this surge in the RMB exchange rate, Wang Qing, Chief Macro Analyst at Orient Jincheng, believes that due to the easing of the Middle East situation and market speculation about intervention in the foreign exchange market by Japanese authorities,

　　According to data, as of 16:30 on May 7, the US Dollar Index was at 97.86, dropping below the 98 threshold and declining approximately 0.17% in one day. Since the beginning of this year, the US Dollar Index has accumulated a drop of 0.42%.

　　Wen Bin, Chief Economist at China Minsheng Bank, wrote in a report that the steady and improving fundamentals of the domestic economy provide a solid foundation for keeping the RMB exchange rate basically stable at a reasonable and balanced level. However, faster import growth compared to exports and a decrease in banks' customer foreign exchange settlement surplus will weaken support for the RMB exchange rate.

　　Huatai Securities stated in a research report that the phrase "basic stability at a reasonable and balanced level" regarding the RMB exchange rate has been mentioned again by the Central Political Bureau meeting after nearly a year. Unlike before, under the impact of geopolitical shocks, the US dollar has come under pressure and the RMB appreciation expectations have increased. At this time, reiterating the basic stability of the RMB exchange rate means that stabilizing the exchange rate has shifted from countering expectations of unidirectional depreciation to preventing excessively rapid appreciation.

　　Market optimism about the easing of tensions in the Middle East has increased, yields on US treasuries of various maturities have fallen, and the US Dollar Index has dropped to its lowest point since the US and Israel launched military actions against Iran, pushing up international gold and silver prices significantly.

　　By the time of publication on May 8, spot gold had risen by 0.84%, trading at $4,724.08 per ounce; spot silver had risen by 1.99%, trading at $79.89 per ounce.

　　In terms of news, on May 7, data released by the central bank showed that

, up from 74.38 million ounces at the end of March, an increase of 260,000 ounces month-on-month. The net increase is significantly higher than last month's 100,000 ounces and is the highest in 16 months.

　　The World Gold Council believes that in the increasingly complex and volatile global geopolitical and trade environment, the demand for diversified allocation of foreign exchange reserves continues to increase, further highlighting the importance of gold as a strategic reserve asset. Wang Qing, Chief Macro Analyst at Orient Jincheng, also stated,

　　A research report by Morgan Stanley stated that since the outbreak of the Iran conflict, gold prices have continued to fall. As central banks and ETFs resume gold purchases and the market anticipates rate cuts by the Fed, gold prices are expected to climb to $5,200 per ounce later this year, up about 9% from late April. This means that compared to current prices, gold still has about 10% room for growth.

　　Consolidated from China Economic Net, 21st Century Business Herald, The Paper, CCTV Finance

Editor: Zhu Henan