[Securities Times: The RMB exchange rate breaking 7 is not a “wolf coming”] Studies by multiple institutions have shown that the correlation between the exchange rate and the stock market is not strong, or there is only a certain correlation within a limited period of time. From an international point of view, the continuous depreciation of the yen in the past two years has not affected the continuous record highs of its stock market; the Turkish currency has depreciated sharply, and last year the Turkish stock market was one of the strongest in the world. But in the short term, rapid depreciation may still cause panic and amplify pessimistic economic expectations, thereby forming a vicious circle of “exchange rate depreciation-panic-asset price decline-foreign capital outflow-accelerated exchange rate depreciation”. Therefore, the central bank has also recently made a clear request to “strengthen the guidance of expectations, correct pro-cyclical and unilateral behavior when necessary, and curb speculation.” As long as short-term speculative capital flows are curbed, the RMB exchange rate will return to the framework driven by fundamentals. Therefore, as long as the exchange rate does not fluctuate unilaterally and sharply, it should not be regarded as “wolf is coming”.
