The central bank raised the foreign exchange reserve ratio again this year
On December 9, the central bank announced that from December 15, 2021, the foreign exchange deposit reserve ratio of financial institutions will be increased by 2 percentage points, that is, the foreign exchange deposit reserve ratio will be increased from the current 7% to 9%.
This is the second time that the central bank raised the foreign exchange deposit reserve ratio in the year. The balance of foreign exchange deposits in November was US $1020 billion. This increase recovered about US $20 billion in liquidity. The RMB appreciated for two months from the beginning of April this year, and the highest rose to 6.3607 on May 31. After the central bank announced to increase the foreign exchange reserve ratio, the RMB exchange rate returned to the fluctuation between 6.4-6.5. However, since mid August, the RMB has reopened a wave of rise, and the recent appreciation rate has accelerated. On December 8, the exchange rate reached a new high since 2018. From the perspective of economic growth, export situation and inflation background, there is a possibility of long-term appreciation of RMB, but too fast short-term appreciation may have a certain negative impact on the export industry. The central bank will raise the foreign exchange reserve ratio again during the year and reduce the supply and liquidity of US dollars, which can alleviate the pressure of rapid appreciation of RMB and promote the reasonable and stable exchange rate.
PPI may have reached the inflection point
In November 2021, CPI was 2.3% year-on-year, a new high in the year, with the previous value of 1.5%; The month on month ratio was 0.4%, and the former value was 0.7%; PPI in the current month was 12.9% year-on-year, and the previous value was 13.5%; The month on month ratio was 0.0%, and the previous value was 2.5%.
Food prices changed from negative to positive year-on-year. The main reasons for the obvious upward trend of CPI this month are: first, the year-on-year correction of food prices; on the other hand, the obvious decline of the base in the same period last year. The recent rebound in pig prices is mainly affected by factors such as seasonal consumer demand growth and tight short-term fat pig supply, but it may be too early to say the real bottom reversal. On the whole, after rising for two consecutive months, CPI is more likely to return below 2% in December. The rise in non food prices remains moderate. Among them, the price of gasoline and diesel increased by 36.7% and 40.6% respectively year-on-year. The price of transportation and communication increased by 0.3% month on month and 7.6% year-on-year.
PPI may have reached the inflection point. The month on month increase of PPI dropped significantly to 0.0% from 2.5% last month. The driving force for the rise of industrial products weakened. The year-on-year base began to rise in November, and PPI is more likely to fall year-on-year. From a month on month perspective, the price of coal dominated by China's pricing has fallen significantly under the promotion of a series of measures such as ensuring the supply and stabilizing the price of bulk commodities, and the coal mining and washing industry has fallen the first among the seven categories of industries. The prices of ferrous metal and non-ferrous metal smelting, rolling and processing industry turned negative month on month, with a year-on-year decline of 8.9 and 3.0 percentage points respectively. On the whole, except that there is still some uncertainty in the price of crude oil, the price of most other bulk commodities is relatively likely to continue to fall. It is expected that the PPI will fall at a high level in the follow-up. After entering the second quarter of next year, the base will rise significantly, and the range of decline may be increased.
On the whole, PPI fall, CPI total temperature and rise are more likely. It is expected that the cpi-ppi scissors difference will gradually narrow, and the pressure on the upstream cost side will be gradually relieved for middle and downstream manufacturing enterprises. For next year's stable and relatively loose monetary policy tone, inflation may not form obvious constraints on the whole.
