Recently, I’ve been studying the issue of the RMB exchange rate and discovered a quite interesting analytical framework. Fu Peng discussed the current economic situation and referenced Mr. Yu Yongding’s twin current and capital account surplus model, which is actually the key to understanding the trend of the RMB exchange rate.

Why is this framework so important? Because it looks at the problem from two dimensions—capital account and current account. Changes in these two dimensions directly influence the direction of the exchange rate. There is a lot of discussion about the RMB exchange rate in the market right now, but many people may not grasp the essence of the issue.

Fu Peng mentioned that there will be an online book club event this year, inviting Yu Yongding to delve into his two works, "Witnessing Imbalance 1" and "Witnessing Imbalance 2." These two books systematically explain how this model interprets economic imbalance issues. If you want to understand why the current pattern of one positive and one negative is emerging, and what this means for the RMB exchange rate, this framework is definitely worth a deep dive.

Honestly, many people discussing the exchange rate tend to only look at surface-level data fluctuations, but if you can understand the logic behind the twin current and capital account surplus model, you can see the full picture more clearly. Fu Peng’s analytical perspective this time indeed provides a good way of thinking.