General

According to the Huacheng Import and Export Data Observation Report, on October 19, the exchange rate of the RMB against the U.S. dollar fell below 7.23, 7.24, 7.25, 7.26 and 7.27 in the offshore market, the lowest intraday drop to 7.2731, a drop of more than 400 points over the previous trading day, and a new low of 7.2675 on September 28. While the offshore RMB exchange rate fell against the US dollar, the US dollar index rose sharply. The US dollar index rose to 112.9943 at the highest level in the session, more than 0.75% higher than the previous trading day.

While the offshore RMB exchange rate fell against the US dollar, the US dollar index rose sharply. The US dollar index rose to 112.9943 at the highest level in the session, more than 0.75% higher than the previous trading day.

According to the Huacheng Import and Export Data Observation Report, the European Union Statistics Bureau released data on October 19 that the euro zone consumer price index (CPI) in September rose 1.2% month on month, up 9.9% year on year. After the data was released, the euro fell more than 0.8% against the US dollar and fell as low as 0.9759.

The next Fed interest rate meeting will be held on November 1. The market expects to raise interest rates by 75 basis points, waiting for the performance of the RMB exchange rate.

The exchange rate of the yen against the dollar hit a new low in 32 years

On the 20th, the yen exchange rate in the Tokyo foreign exchange market continued to depreciate, once falling below 150 yen to 1 dollar, and hit a new low after 32 years. The depreciation rate in the year has exceeded 30.17%.

Previously, the Bank of Japan bucked the trend and adhered to the ultra loose monetary policy. Especially after May, the interest margin between the United States, Japan and other countries against Japan continued to expand, which directly triggered the rapid depreciation of the yen.

In addition, the weakening of Japan's fundamentals is also an important reason for the depreciation of the yen, especially the energy crisis. Japan's terms of trade deteriorated rapidly, the trade deficit widened, and the yen weakened against a basket of currencies. Huacheng's import and export data observation reported.

The Lebanese pound fell below 40000: 1

In Lebanon, where banks were robbed recently, the black market exchange rate of the Lebanese pound against the US dollar fell below 40000 to 1, a record low.

Since 1997, Lebanon has implemented a fixed exchange rate policy of pegging its local currency, the Lebanese pound, to the US dollar. The official exchange rate has remained at 1507.5 to 1.

Seen from the year line, the trend of the Lebanese pound against the US dollar has been stable for decades, with little fluctuation.

However, this is not the case. In fact, the Lebanese pound has a fixed nominal exchange rate. In the black market, 40000 Lebanese pounds have been exchanged for one dollar.

Since the banking crisis in September 2019, the black market exchange rate of the Li pound against the US dollar has fallen sharply. Over the past three years, affected by multiple factors such as political economy, the COVID-19 and the Beirut Port explosion, the exchange rate of the Lebanese pound against the US dollar has declined by more than 96%.

Lebanon is a country that relies heavily on imports. The serious devaluation of the Lebanese pound has led to high domestic prices. Lebanon has seen triple digit inflation index for many times, and residents' purchasing power has shrunk significantly. Huacheng Import and Export Data Observation reported.

Vietnam Announces to Expand Trade Range

In order not to let the devalued currency affect trade as much as possible, the Central Bank of Vietnam announced to expand the trading range of Vietnamese dong against the US dollar from 3% to 5%.

According to the analysis, expanding the trading range shows that Vietnam is willing to tolerate the further weakening of the dong. This sent a signal to the market that it was tolerating more foreign exchange weakness and volatility, and the central bank was reluctant to use reserves to protect the Vietnamese dong.

Since the beginning of this year, the aggressive interest rate increase of the Federal Reserve has put pressure on emerging market currencies, and the Vietnamese dong cannot be avoided.

Although the economy has provided some support for the exchange rate, the exchange rate of the Vietnamese dong against the US dollar has fallen by nearly 7% so far this year, with a daily decline of nearly 1%, hitting a new record low.

In order to defend the exchange rate, the Central Bank of Vietnam was forced to significantly raise interest rates and sell a lot of dollars. After the US Federal Reserve raised interest rates by 75 basis points in the middle of September, the Central Bank of Vietnam stabilized its foreign exchange market, and then announced an emergency interest rate increase of 100 basis points, the first interest rate increase since the outbreak of the epidemic in September 2020.

In addition, the Central Bank of Vietnam said in a statement that it would continue to manage the Vietnamese dong in a flexible way, and appropriately use other monetary policies to stabilize the money market, curb inflation and maintain macro stability.

Trade situation of other countries

Egypt

Affected by the recession of tourism industry and the withdrawal of international investors, Egypt also faces a shortage of foreign exchange. For example, General Motors, Nissan, Heineken and other companies have stopped their activities in Egypt. At present, the Egyptian pound has depreciated by 14%, the exchange rate of the US dollar against the Egyptian pound has climbed, and it is more difficult for local buyers to make foreign exchange payments.

Local buyers need to meet many conditions for exchange from banks, and the process is very strict. As a result, some buyers turn to the black market, which leads to the further rise of the exchange rate between the US dollar and the Egyptian pound.

Pakistan

In the first half of 2022, the Pakistani rupee plummeted to 200:1 against the U.S. dollar, and the country's trade deficit in the new fiscal year increased 55.7% year on year, a record high. Meanwhile, Pakistan's foreign exchange reserves fell to the lowest level in three years.

In response, Moody's Analytics announced to downgrade the long-term deposit ratings of five banks in Pakistan from B3 to Caa1, and also downgraded the bank's long-term foreign exchange counterparty risk rating (CRR) from B3 to Caa1.

The rating agencies believe that Pakistan's economic outlook has deteriorated, government liquidity has increased, external vulnerability risks and debt has increased.

Sri Lanka

Bandura Gunawadner, spokesman of the Sri Lankan Cabinet, said that the Sri Lankan Cabinet had approved the downgrade of the country from a "middle-income country" as defined by the World Bank to a "low-income country" in order to obtain preferential funds from international organizations. Huacheng Import and Export Data Observation reported.