Tao Xiang International Finance Lectures (No. 7): RMB Foreign Exchange Transaction

On November 26, the Tao Xiang International Finance Lectures (No. 7), co-organized by IMI and the School of Finance of Renmin University, was held at RUC. Mr. He Xiaobo, senior trader from Global Markets Department of Bank of China Head Office, discussed about the practice of RMB foreign exchange transaction and some related hot issues. The lecture was chaired by Wang Fang, senior research fellow of IMI and associate professor from the School of Finance of RUC. First of all, Mr. He briefly introduced the career as a trader combined with his own experience, such as a trader’s working environment and process. Besides, he also introduced the information systems and trading platforms commonly used in foreign exchange market. He pointed that the essence of transaction is actually a probability game, it can’t be easy to get long-term profits in transaction market. So we need to study hard, and collect experience from transactions. Secondly, Mr. He briefly introduced the basic condition of RMB market, and highlighted the differences and connections between onshore RMB market and offshore RMB market. By combining his own working experience in the offshore RMB market in Hong Kong, he introduced some major products in the RMB market, such as forward exchange, currency option and dim sum bond. At last, he talked about the 8.11 exchange rate reform. He thought this reform improved the transparency of the price mechanism of RMB central parity rate, integrated the offshore RMB market and onshore RMB market, and narrowed the spread between the two markets. He then analyzed the recent depreciation of RMB, and said that RMB is still the most stable currency of emerging countries. There is no need to be over panic. As to the future of RMB, he mentioned that in order to stabilize the exchange rate, reserves and internalization, we need to choose new policies. Stable reserve, internalization and floating exchange rates are the most probable choices.

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