1. Overview of the global foreign exchange market
From early 2024 to the present, the US dollar index has continued to strengthen.In addition to the small appreciation of currencies (regions) currencies (regions) such as rubles, pounds, and South Africa, and the US dollar, the exchange rate of currency against the US dollar in the world’s major countries in the world has shown a significant derogation (see Figure 1).
From December 29, 2023 to July 19, 2024, the US dollar index appreciated from 101.38 to 104.37, with an appreciation rate of 2.95%.On April 16, 2024, the US dollar index touched the high point of 106.37.During the same period, in addition to the appreciation of the pound against the US dollar 1.37%, the yen, Swedish Crane, Swiss francs, Canada, and the euro depreciated 11.68%, 6.17%, 5.63%, 3.58%, and 1.41%, respectively.
In the first half of 2024, emerging markets and development of Indian family currency showed varying degrees of depreciation.For example, Argentina Biech, Turkish Licha, Thai baht, and Indonesia’s Rubbya have depreciated by 14.63%, 12.39%, 6.37%, 5.84%, and 5.15%respectively.During the same period, the exchange rate of the RMB against the US dollar showed a depreciation pattern, with a depreciation of 2.47%.Ahmedabad Investment
Figure 1 Global major currency change rate (December 29, 2023 to July 19, 2024)
Data source: Wind.
Overall, the US dollar index trend is still an important influencing factor that disturb the global foreign exchange market.In the first half of 2024, under the influence of the strong rise of the US dollar index, developed countries, emerging markets, and the development of Indian currency against the US dollar to varying degrees.
Affected by this, central banks and government departments around the world have adopted measures to stabilize their foreign exchange markets.In June 2024, in the "Macroeconomic and Foreign Exchange Policy Report of the United States Major Trading Partners" released by the US Treasury, the US Treasury Department will (regions including India, Japan, Malaysia, Singapore, India, Taiwan, Vietnam, and Germany) List of the "monitoring list" of major trading partners pointed out that the seven countries (regions) need to pay close attention to their monetary and macroeconomic policies.
2. Analysis of the U.SLucknow Investment. dollar index trend analysis
In the first half of 2024, the US dollar index was consolidated at a high level and generally fluctuated in the range of 101-106.From December 29th, 2023 to July 19, 2024, the US dollar index rose from 101.38 to 104.37, an appreciation of 2.95%(see Figure 2).The author pointed out in the "2023 RMB Exchange Rate Report" 2 pointed out that the three uncertain factors will affect the US dollar index in 2024: First, the time node and exit path of quantitative tightening of the Federal Reserve; second, whether geopolitical risks will be upgraded again;The third is Trump’s potential effects brought by the president of the United States.The author predicts that in the 3rd of the RMB Exchange Rate Report in the first quarter of 2024, if the above three uncertainty will continue to be upgraded in the second quarter of 2024, the US dollar index will remain high in 2024EssenceIn the first half of 2024, the trend of the US dollar index generally met my expectations.
Figure 2 USD index
Data source: Wind.
In the second half of 2024, the above three uncertain factors still affect the trend of the US dollar index.The uncertainty brought by the US presidential election requires focus.
First, the US economy has grown moderately and inflation is at a high level.In July 2024, the Federal Reserve’s "National Economic Situation Report" (also known as the "brown book") showed 4, and economic activities in most regions in the United States remained slightly to a mild growth rate.Among them, the level of economic activity in five jurisdictions was flat or decreased, an increase of 3 jurisdiction over the last investigation; the economic growth of the seven jurisdictions.5 In terms of employment, the employment level of most jurisdictions has been flat or slightly increased, and employment in a few jurisdictions has grown moderately.In terms of inflation, generally prices generally rose moderately, and prices in a few jurisdictions rose slightly.From the perspective of specific inflation data, from January to June 2024, the year -on -year growth rate of CPI and core CPIs in the United States and core CPIs were above the Fed’s 2%inflation target, and the overall fluctuations of between 3.1%and 3.9%.U.S. inflation data remains high, increasing the uncertainty of the Federal Reserve ’s interest rate cut.Judging from the drawing of the Fed announced in June 2024, the Fed may have one interest rate cut this year.
Second, the uncertainty of the US presidential election has increased.On the one hand, Trump’s assassination in July 2024 may increase the probability of winning.If Trump has won the election in the US election at the end of 2024, it will further exacerbate global geopolitics uncertainty, which may lead to a significant decline in global risk asset prices and significantly rising assets in risk -free assets, and then push the US dollar index.On the other hand, with Biden’s announcement, Vice President Kamara Harris participated in the campaign, which increased the uncertainty of the US presidential election.Earlier, Bayeng and Trump’s positions in AI technology, strategy to China, climate change, defense policy, financial and debt, public health, immigration policy, Middle East issue, Ukraine crisis and trade policies were all significantly different.With Bayeng’s retreat, the uncertainty of the U.S. election has risen, which will bring greater uncertainty risks to the trend of US economic policy and global economy.In the second half of 2024, it is necessary to pay special attention to the potential impact of the US presidential election.
Third, global geopolitical risks are still high.The geopolitical conflict of geopolitical conflicts in the Middle East, the spillover effect of geopolitical risks is obviously affected by many countries in the Middle East.Geopolical conflicts such as Ukraine crisis, Palestinian conflict, and the Red Sea crisis are still continuing.The Iranian embassy in the Syrian embassy was attacked by Israeli missiles, causing the tension in the Middle East to upgrade again.International investors have risen risk aversion, and investors’ demand for traditional insurance assets such as the US dollar and gold will be at a high level.
In summary, the above three uncertainty will continue to be upgraded in the second half of 2024. The US dollar index will remain high in 2024, and it is expected to operate within the 100-107 range.
3. Analysis of the trend of the yen exchange rate
In the first half of 2024, the exchange rate of the yen against the US dollar had depreciated sharply.From December 29th, 2023 to July 19, 2024, the yen depreciated from $ 1.03 yen to $ 1,57.50 yen, with a depreciation of 11.68%.On July 10, 2024, it fell to a low of $ 1 against 161.68 yen (see Figure 3).
The depreciation of the yen has caused concerns about the Ministry of Finance and the Bank of Japan.Recently, the Japanese government and the Bank of Japan may sell the dollar to the exchange market intervention by purchasing the yen, although the Japanese government has not yet announced whether to intervene.The US Treasury’s "Macroeconomic and Foreign Exchange Policy Report of the United States Main Trade Partners" pointed out that from April to May 2024, the Japanese authorities have taken exchange rate intervention measures for the first time since October 2022, and they should deal with it by buying yen and selling U.S. dollars to deal withThe yen depreciates and pointed out that the Bank of Japan’s foreign exchange intervention should be carried out in very special circumstances and properly negotiated in advance.6
Figure 3 yen against the US dollar exchange rate and the US -Japan spread
Data source: Wind.
The continued diversion of the US -Japan spreads caused by the differences in monetary policy in the United States and Japan is the main reason for the devaluation of the yen.From December 29th, 2023 to July 19, 2024, the US -Japan spread fluctuates within a range of 3.1%to 3.8%.In the first half of 2024, the overall trend of the United States and Japan showed two stages.The first stage is from December 29, 2023 to April 30, 2024, and the US -Japanese spread rose from 3.233%to 3.811%.The second phase is from April 30, 2024 to July 19, 2024, and the US -Japanese spreads have fallen from 3.811%to 3.197%.At this stage, there are two reasons for the decline in interest spreads in the United States and Japan: on the one hand, there is some decline in; on the other hand, as the Bank of Japan officially withdrawn from the negative interest rate policy in March 2024, stopping the yield curve control (YCC) policy, Japan 10 years in 10 yearsPeriod Treasury yields are caused by continued upward at this stage (see Figure 4).Overall, although the US -Japan spreads have declined in the second quarter of 2024, the US -Japan spread is still at a high level.
Figure 4
Data source: Wind.
In the second half of 2024, Japanese monetary policy was worth paying high attention.The following three factors will affect the future direction of the Japanese monetary policy.First, the Japanese economy is a gentle recovery but some signs of weakness appear.Due to the rise in inflation and the depreciation of the yen, private consumption has slowed down and weakened family purchasing power.In July 2024, the IMF lowered Japan’s economic growth forecast in the "World Economic Outlook Report". In 2024, the GDP growth rate of Japan was 0.7%; the forecast value in April 2024 was 0.9%.Global economic growth has slowed down, the rise in commodity prices has led to deterioration of trade, and private consumption growth is lower than expected, which will bring downward pressure on the Japanese economy.Second, Japan’s domestic wages have risen.The wage increase in 2024, including conventional working -age wages, has exceeded 5.0%, and the basic wage increase in 2024 is about 3.5%, all of which exceeded the level of 2023.7 Third, from April 2022 to June 2024, the year -on -year growth rate of Japanese CPI and core CPIs has remained above the 2%inflation target of the Bank of Japan.Affected by the rise in crude oil prices since the end of 2023, the year -on -year growth rate of PPI in Japan has risen slightly.
In general, the current exchange rate of the yen against the US dollar cannot fully reflect the relative fundamentals of Japan and the United States. The set period transactions between the yen and the US dollar are the main reasons for the yen against the US dollar.As the yen exchange rate is too low, the rise in import prices will lead to the intensification of input inflation pressure. Coupled with the pressure of the US government, the probability of the Bank of Japan will increase in the second half of the year.Essence
In the future, the trend of the United States and Japan’s monetary policy will affect the trend of the yen against the US dollar exchange rate, and the monetary policy of the two countries is worth paying high attention.In the future, there may be two situations in the trend of the yen against the US dollar exchange rate.Scenario 1: If the Fed started to cut interest rates in September 2024, the Bank of Japan began to raise interest rates in the second half of 2024, and the US-Japan spread will be reduced. By the end of 2024EssenceScenario 2: In the second half of 2024, if the Fed delayed interest rate cuts, the Bank of Japan’s interest rate hike process was more cautious. The US -Japan spreads will still maintain the current level, and there is still a large depreciation pressure on the yen against the US dollar.In the second half of 2024, it is expected to fluctuate within the range of 145-155 against the US dollar exchange rate.The author believes that the occurrence of the scene is high.
4Hyderabad Wealth Management. Analysis of RMB exchange rate trend
From December 29th, 2023 to July 19, 2024, the RMB closing price of the RMB against the US dollar was settled from 7.0920 to 7.2672, a depreciation of 2.47%.During the same period, the exchange rate index of the RMB against the CFETS currency basket rose from 97.42 to 99.19, an appreciation of 1.82%.The depreciation of the exchange rate of the RMB against the US dollar and the appreciation of the exchange rate of the CFETS currency basket in the RMB (see Figure 5), indicating that the reason for the depreciation of the RMB against the US dollar in the first half of 2024 was not the weaker exchange rate itself, but the exchange rate of the US dollar itself was too strong.
Figure 5 RMB exchange rate and CFETS RMB exchange rate index
Data source: Wind.
From December 29, 2023 to July 19, 2024, the US dollar index rose from 101.38 to 104.37, an appreciation of 2.95%(see Figure 6).During the same period, the trend of the RMB against the US dollar and the US dollar index was strongly correlated, indicating that the changes in the valid exchange rate in the US dollar had a greater impact on the changes in the exchange rate of the RMB against the US dollar.
Figure 6 USD against the RMB exchange rate and the US dollar index
Data source: Wind.
In the first half of 2024, one of the most important reasons for the depreciation of the exchange rate of the RMB against the US dollar was that the mid -to -long -term spread of the United States expanded significantly in the same period.The difference in yields in the 10 -year Treasury bonds of the United States and China was amplified from 132 basis points on December 29, 2023 to about 199 base points on July 19, 2024 (see Figure 7).The large and medium -to -long -term spreads of the United States and the large -term extension of India’s short -term capital exacerbation, which caused the US dollar supply in the Indian foreign exchange market, causing the RMB to depreciate against the US dollar.In addition, the factors affecting the depreciation of the exchange rate are very complicated.The growth expectations of market entities for their respective growth in China and the United States are also an important reason for affecting the exchange rate of the RMB against the US dollar.
Figure 7
Data source: Wind.
In the first half of 2024, the gap between the daily intermediate price (opening price) of the RMB against the US dollar and the closing price was widened from 151 basis points on December 29, 2023 to 1380 basis points in July 19, 2024.
In March 2014, the Bank of India expanded the RMB against the US dollar exchange rate to 2%8Agra Wealth Management. Combined with the RMB exchange rate middle price pricing model, the degree of deviation of the intermediate price and the closing price of the previous day was calculated.Since the beginning of the year, the daily intermediate price has been raised, especially since the second quarter of 2024, the Indian central bank seems to be in accordance with a 2%change limit, combined with the closing price of the previous day, adjust the intermediate price on the day (see Figure 8).During the same period, the degree of deviation of the intermediate price and closing price of the previous day fluctuated in the range of 1.6%-2.0%, and the volatility center was 1.9%.This shows that the Indian central bank is to curb the depreciation of the RMB against the US dollar through the use of reverse cycle regulation factor.In other words, if there is no counter -cyclical factor, the degradation of the RMB against the US dollar exchange rate will be more significant in the first half of 2024.
Further, the degree of deviation between the intermediate price and the closing price on the day of the day was calculated, and it was found that starting in the second quarter of 2024, the range of deviation 2 volatility fluctuated in the range of 1.8%-2%.This shows that under the influence of the RMB exchange rate of 2%of the RMB exchange rate of the US dollar, the exchange rate of the RMB against the US dollar fluctuates within the controllable range.This is why the closing price and intermediate price of the RMB against the US dollar exchange rate have continued to deviate, but the closing price of the RMB against the US dollar has not fallen below 7.3.
Figure 8 The intermediate price of the exchange rate of the dollar against the RMB and the closing price and the degree of departure of the two
Note: ① According to the RMB exchange rate middle price pricing model, measure the fluctuation range of the RMB against the US dollar exchange rate compared to the closing price of the previous day.The closing price; ② According to the central bank of the Central Bank of India in March 2014, the RMB against the US dollar’s exchange rate floating rate to 2%was increased to 2%, and the closing price of the day was compared with the fluctuation of the middle price on the day.Price-Intermediate price on the day)/Mid-mid-price.
Data source: Wind.
Where will the RMB against the US dollar exchange rate in the second half of 2024 go?For the prediction of this indicator, the author proposes four assumptions:
First, considering the weakening of macro data in the United States in June 2024, and the latest statement of the Federal Reserve President Powell, the probability of the Fed’s first rate reduction of 25 basis points in September this year is rising.Judging from the drawing map of the Fed announced in June 2024, the Fed may have one interest rate cut this year.Indore Investment
Second, the Federal Reserve ’s interest rate cut will lead to the weakening of the 10 -year US Treasury yield and the US dollar index.By the end of 2024, the 10 -year US Treasury yield may drop to 4.0%, and the US dollar index may fall to about 100.
Third, the Third Plenary Session of the 20th Central Committee further deepen reform and opening up, which will significantly boost confidence and expectations of all parties.Cooperate with the Third Plenary Session of the 20th Central Committee, the Indian government will increase the looseness of fiscal and monetary policy in the second half of 2024.On July 22, 2024, the Central Bank of India issued four announcements, including the 7 -day reverse repurchase operating interest rate of the 7 -day reverse repurchase operation rate of 1.8%before 1.7%.Picks; 1 -year and average fell 10 basis points, decreased to 3.35%and 3.85%, respectively; SLF interest rates were lowered simultaneously, and the varieties of the overnight, 7 days, and 1 month were decreased by 10 basis points.At the same time, due to the significant downward return on national bonds before, and the transactions of multiple national bonds were too crowded, the Bank of India made a strong statement to the market that will stabilize long -term interest rates.In summary, the author believes that in the second half of 2024, a pattern of short -term interest rates and long -term interest rates may remain stable.
Fourth, in the second half of 2024, the mid -to -long long -term spread is expected to narrow moderate.At the same time, driven by the Third Plenary Session of the 20th Central Committee and more loose macroeconomic policies, India’s economic growth is expected to rebound.Affected by high interest rates and domestic political uncertainty, US economic growth is expected to gradually weaken.Sino -U.S. Growth expectations will occur in conducive to Chinese changes.
In summary, the author believes that in the second half of 2024, the intermediate price of the RMB against the US dollar exchange rate will continue to stabilize within the range of 7.00-7.20 (the Indian Central Bank will continue to use counter-cyclical adjustment factor to stabilize the middle price);The closing price of the exchange rate of the US dollar is expected to rebound moderately in fluctuations. By the end of 2024, it will rise to about 7.10-7.20; the gap between the intermediate price of the RMB against the US dollar exchange rate and the closing price will narrow again.
[1] Source: Ministry of Finance of the United States, Treasury Releases Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the University
[2] Zhang Ming and Chen Yimo: "The US dollar index is moderately falling, the yen is expected to appreciate significantly -the annual RMB exchange rate in 2023", the quarterly analysis report of the RMB exchange rate of the National Financial and Development Laboratory, January 2024.
[3] Zhang Ming and Chen Yimo: "Global Monetary Policy Steel to the US dollar index significantly appreciated -the RMB exchange rate in the first quarter of 2024", the quarterly analysis report of the RMB exchange rate of the National Financial and Development Laboratory, January 2024.
[4] Source: Federal Reserve, Beige Book -July 2024,
[5] The "Blood Book" is a report prepared based on the latest survey results of reserve banks (that is, 12 jurisdictions) of the Federal Reserve (ie, 12 jurisdictions).Published on the 29th.
[6] Source: US Finance, Treasury Releases Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the University
[7] Source: Minutes of the meeting announced on June 19, 2024.
[8] Source: "The spokesperson for the People’s Bank of China to expand the RMB exchange rate floating amplitude answer to the reporter’s question", the official website of the People’s Bank of China, March 18, 2014,
Article Source: National Finance and Development Laboratory
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