Goldman Sachs: The RMB to USD exchange rate breaks above 6.8, foreign capital increases holdings in RMB assets

CryptoWorld News: Goldman Sachs analyst Chen Xinquan stated that the US-China interest rate differential is gradually recovering, and foreign capital is increasing its holdings of RMB assets. Today, the RMB to USD spot exchange rate opened at 6.8000, then broke through this level, reaching a new high since mid-February 2023. This year, the internationalization of the RMB has accelerated, with new regulations for cross-border RMB interbank financing introduced, and government bond futures opening up to qualified foreign investors. A series of reforms to deepen opening-up further facilitate foreign investment in RMB assets. In the first quarter, China’s cross-border RMB settlement amount under the current account increased by 14% year-on-year, and since March, trading volume on the Cross-Border Interbank Payment System (CIPS) has significantly expanded. More foreign investors are issuing RMB-denominated bonds; in April, offshore RMB bonds issued by foreign issuers exceeded 26.2 billion yuan, about four times the amount in the same period last year. Goldman Sachs predicts that the RMB to USD exchange rate will reach 6.5 in the next 12 months, appreciating by about 5%, but the appreciation of the RMB against a basket of currencies will be smaller than its appreciation against the US dollar. It is expected that the nominal effective exchange rate of the RMB will appreciate by approximately 4% over the next 12 months.