The U.S. dollar and U.S. bonds continue to soar, and the dollar-offshore RMB exchange rate has reached a record high

In the third quarter of 2019, the USD/CNH exchange rate was as high as 7.19630, and the exchange rate fluctuated between about 6.9 and 7.1 in the following quarters. Until April 2020, the Fed used quantitative easing to inject a large amount of US dollars into the market. The large influx of US dollars led to an oversupply of US dollars, and the exchange rate against the offshore RMB fell for nearly two consecutive years. In January 2022, the exchange rate against the offshore RMB was reported. 6.3547.

Until April 2022, the Federal Reserve realized that the inflation problem was beyond the expected and controllable range, and decided to change its monetary policy again, from quantitative easing to quantitative tightening. The 10-year U.S. Treasury yield rose to 4.1% at one point, while the dollar’s purchasing power against other currencies surged. Among them, the USD/RMB rose above 7.27 last night, and the previous highest was 7.2675 in September 2022.

The People's Bank of China did not announce quantitative easing or tightening, so the exchange rate against the US dollar continued to be under pressure, which affected the continuous decline of China's A shares and Hong Kong's Hang Seng Index.