On September 24, 2022, the Macro-Finance Salon (No. 192) was held online. This event was co-hosted by the International Monetary Institute (IMI) and the Department of Monetary Finance, School of Finance, Renmin University of China (RUC). A number of financial experts were invited to explain the direction of monetary policies amid fluctuations in the RMB exchange rate. Lu Zhe, IMI Research fellow and Chief Macro Economist of Topsperity Securities, delivered a keynote speech. The seminar was joined by Ding Jianping, Deputy Director, Shanghai Institute of International Finance Center, Guan Tao, Global Chief Economist, BOC International, Lian Ping, Chief Economist and Director, Zhixin Investment Research Institute and Lu Dong, Associate Professor, School of Finance, RUC. The salon was moderated by Wang Fang, IMI Deputy Director, Associate Dean, School of Finance, RUC.

Lu Zhe delivered a keynote speech composed of two parts. In the first part, he forecasts where the exchange rate will go in the future against the backdrop of high RMB exchange rate volatility and the risk of RMB depreciation. The second part is about how to maintain a balance between a stable growth rate and a stable exchange rate against the backdrop of pressure in China’s macro-economic situation and RMB depreciation. He also mentions the subsequent monetary choices of China’s central bank. He believes that the depreciation of the yuan is mainly attributed to declining exports, rising interest rate spread between China's central bank and the European Central Bank and the transmission of short selling pressure from offshore to onshore. Regarding the trend of the RMB exchange rate, he believes that a further downward movement of the exchange rate will help China's fundamentals and economy make progress while maintaining stability. The exchange rate will see a certain appreciation after Q1 next year and bring a “Strong Dollar” to an end. The yuan is going to be fixed and appreciate in January next year. In terms of monetary policies, Lu makes three conclusions: first, the short term policy interest rate will not be further cut this year; second, cutting required reserve ratio is of higher priority than lowering interest rates and is likely to be implemented in October or November; third, if a rate cut is carried out, the People’s Bank of China will choose to lower the five-year LPR or bill rate to depress the price cost of the real demand side.

In the seminar session, guests discussed the issues of fluctuations in the RMB exchange rate, future monetary policies and RMB internationalization from multiple perspectives including internal and external factors of RMB exchange rate adjustment, policies on exchange rates and interest rates and the space for the central bank’s monetary policy tools.