Article/Han Huishi, columnist of Sina Financial Opinion Leader Column (WeChat official account kopleader)
The author wrote in the previous article Why the power of foreign exchange settlement is still insufficient As mentioned in, there are still some differences in the current market expectations. It is difficult for export enterprises to improve their willingness to settle foreign exchange when they are not sure that the RMB will remain strong for a long time in the future. However, the low willingness to settle foreign exchange will directly lead to the difficulty of quickly disappearing the deficit in the settlement and sales of foreign exchange in the settlement and sales market, which will lead to the difficulty of quickly disappearing the depreciation pressure.
Han Huishi: Hidden Worries Behind the Shrinking of the Deficit in Settlement and Sales of Foreign Exchange The latest October foreign exchange settlement and sales data has provided us with further evidence to examine market sentiment.
The deficit of foreign exchange settlement and sales of banks in October decreased by 83% month on month compared with September, from 17.6 billion US dollars to 2.9 billion US dollars, which is good news. The narrowing of the deficit under the broad scope of foreign exchange settlement and sales is quite beneficial to stabilizing market sentiment. However, the shortcoming is that this is only the positive impact of the historical data after the publication, and this data itself cannot explain how the market sentiment changed in October.
The reasons for the same data change may be quite different: the contraction of the deficit may be caused by the expansion of foreign exchange settlement; It may also be caused by the contraction of foreign exchange purchase; It may be that the settlement and sales of foreign exchange expand at the same time, but the settlement and sales of foreign exchange expand faster; Or the settlement and sales of foreign exchange shrink at the same time, but the rate of shrinkage of the settlement and sales of foreign exchange is slower. Different scenarios correspond to different market sentiment.
The contraction of the bank's foreign exchange settlement and sales deficit in October belongs to the fourth situation, that is, the settlement and sales of foreign exchange shrink at the same time, but the contraction of foreign exchange settlement is slower. In October, bank foreign exchange settlement decreased by 2.8 billion US dollars month on month, and bank foreign exchange sales decreased by 17.4 billion US dollars month on month.
Generally speaking, without considering the changes in foreign trade and foreign investment, the decrease in bank sales of foreign exchange often represents the weakening of investors' depreciation expectations. Some people choose to postpone the purchase of foreign exchange because they are worried about the losses caused by the appreciation of RMB after the purchase of foreign exchange. The decrease in foreign exchange settlement often indicates that some investors still have depreciation expectations, and they are worried that RMB will continue to depreciate after the settlement, so they choose to continue to hold foreign exchange and wait for a better time for foreign exchange settlement.
At present, the settlement and sale of foreign exchange seem to give different market signals, while the settlement of foreign exchange has only shrunk by 2.8 billion dollars. This scale is really small, and it is difficult to explain the problem. What should we do?
This requires further analysis of the specific data of foreign exchange settlement and sales. (The following concepts are rather tongue twisting and need to be carefully distinguished)
The foreign exchange settlement and sales data of banks with a deficit of US $2.9 billion released by the SAFE is a big basket with a somewhat complex structure, which mainly includes the bank's own foreign exchange settlement and sales and the bank's settlement and sales of foreign exchange on behalf of customers. In the settlement and sales of foreign exchange on behalf of customers, there are also spot amount of the current month and performance data of forward settlement and sales of foreign exchange on behalf of customers in the current month. At the same time, it does not include the new forward foreign exchange settlement and sales contract data of the current month, which is published separately.
Among the above data, the spot amount and forward foreign exchange settlement and sales data of the current month in the settlement and sales of foreign exchange by banks on behalf of customers are the most closely related to market sentiment. Because the performance data of forward foreign exchange settlement and sales in the current month is the result of historical contracts, and the price of forward foreign exchange settlement and sales has been determined at the time of signing the contract, which has nothing to do with the current market sentiment, it needs to be removed from the data of bank agent foreign exchange settlement and sales. While the bank's own foreign exchange settlement and sales are mainly closely related to the bank's overseas investment, overseas shareholder dividends and gold transactions, and not closely related to the market expectations of general enterprises and individual investors. Therefore, when judging market sentiment, the bank's own foreign exchange settlement and sales data also need to be excluded.
Although they are all settlement and sales of foreign exchange on behalf of customers, there are differences in the sensitivity of market sentiment between spot settlement and sales of foreign exchange and forward settlement and sales of foreign exchange.
The data of spot settlement and sales of foreign exchange includes both enterprise and personal data, which theoretically reflects market sentiment more comprehensively. However, most of the spot transactions must occur in the current period, such as external payment for import goods, tuition fees, internal payment for workers' wages (after settlement of foreign exchange), raw material prices, and so on. Regardless of whether enterprises or individuals have expectations for the rise or fall of the exchange rate, these transactions are difficult to delay, so although the data of spot settlement and sales of foreign exchange are more comprehensive, However, it is difficult to distinguish whether it is the market expectation or the actual cross-border payment demand that dominates when the data scale changes little.
As the forward settlement and sales of foreign exchange only need to sign a contract, the actual delivery date may be a few months, or a year or two later, so the reaction to market sentiment is relatively direct. At present, only enterprises in China can carry out forward foreign exchange settlement and sales operations with banks, so the forward foreign exchange settlement and sales actually reflect the market sentiment of institutional investors. Compared with the general public, these investors have more advantages in information acquisition and analysis ability.
Next, let's take a look at what the forward foreign exchange settlement and sales data tell us.
In October, the contract of forward foreign exchange settlement reached US $9.3 billion, the contract of forward foreign exchange sales reached US $6.5 billion, and the surplus of forward foreign exchange settlement and sales reached US $2.8 billion. It seems that there is a strong demand for foreign exchange settlement, but the actual situation is not so simple.
First, look at the forward exchange settlement contract data. The scale of forward foreign exchange settlement in October has shrunk for the third consecutive month, shrinking 54% from the periodic peak of US $20.3 billion in July and 67% from the annual peak of US $28.2 billion in May. Such a large scale and consecutive months of shrinkage shows that with the continuous depreciation of the RMB in the earlier period, the depreciation expectations of export enterprises are increasing, so although the price of foreign exchange settlement is getting better and better, they are increasingly unwilling to lock in the price of foreign exchange settlement in advance.
Then look at the signing of forward foreign exchange sales. Similar to forward foreign exchange settlement, the contracted scale of forward foreign exchange sales has shrunk for three consecutive months, and the contracted scale in October has shrunk by 82% compared with that in July. Generally speaking, the sharp contraction of the contract scale of forward foreign exchange sales often means that the appreciation expectation of import enterprises has increased.
The above data trend seems to indicate that import and export enterprises may have big differences in market expectations: export enterprises have stronger depreciation expectations, import enterprises have weaker depreciation expectations, and even many import enterprises have appreciation expectations.
But the conclusion cannot be drawn too early. Because here we do not consider the regulatory requirement of 20% risk reserve for forward sales of foreign exchange. At present, banks need to pay 20% of the foreign exchange risk reserve according to the contract amount after signing the forward foreign exchange sales contract with enterprises. In order to make up for their losses, banks need to pass on the cost to customers by raising the forward foreign exchange sales price. At present, when a one-year forward foreign exchange sales contract is signed, the actual signing price of the customer is about 400-500 basis points higher than the quotation in the inter-bank market.
Please note that this is not a small cost. This means that $100 million of forward foreign exchange purchase customers will have to pay an additional 4-5 million yuan. Under the influence of the risk reserve, as long as the import enterprise's expectation of RMB depreciation is not very strong, he will carefully weigh whether to sign a contract. Because no contract is signed, as long as the RMB does not depreciate significantly, it may be cheaper to trade in the spot market in the future than to sign a forward exchange sales contract.
Considering that despite the continuous depreciation of RMB in the past few months, it stopped at the moment of approaching 7.0. In addition to the recent central bank officials' confidence in maintaining the long-term stability of RMB, import enterprises may form the expectation that even if the RMB depreciates, the depreciation will not be large. Under the control of this expectation, their motivation to sign forward exchange sales contracts may be significantly reduced. But please note that this may not mean that they have a strong expectation for the appreciation of the RMB.
On the whole, the data of forward foreign exchange settlement and sales show that the depreciation expectations of some export enterprises are still strong, the power of foreign exchange settlement is still weak, and it has become weaker and weaker in the past few months; The mood of import enterprises is relatively vague, but the expectation of a sharp depreciation of the RMB should be relatively weak. Relatively speaking, the overall mood of import enterprises is a little more optimistic than that of export enterprises.
In previous articles, the author has repeatedly stressed that under the management framework of the actual needs of foreign exchange settlement and sales, the willingness to settle foreign exchange is the first and the basic element to ensure the balance between supply and demand in China's foreign exchange market. The demand for foreign exchange purchase is limited by the scale of imports and foreign investment, and its expansion space is limited. Although the deficit of foreign exchange settlement and sales in October shrunk significantly, it is not a happy time yet. For quite a long time in the future, stabilizing the expectations of export enterprises and improving their foreign exchange settlement power is still a work that needs to be focused on.
Good luck to all old friends! Wish RMB good luck too!
(The author of this article introduces: Research Director of CCB Financial Assets Investment Co., Ltd.)
