The RMB middle price fell below the 6.7 mark and hit a new low of 6 years.

October 10 is the first trading day after the National Day holiday. The China Foreign Exchange Trading Center announced that the central parity of the US dollar against the RMB exchange rate was priced at 6.7008, a 230-point depreciation, a six-year low.
Analysts pointed out that the probability of a Fed rate hike, the renminbi foreign exchange reserves hit a five-year low, and the tumble of the pound during the National Day holiday are the reasons for the decline in the RMB exchange rate.
In addition, the industry generally believes that with the successful completion of the RMB into the SDR currency basket, the two-way volatility of the renminbi will also be honored, the central bank will let the market forces more determine the trend of the RMB exchange rate, and the volatility of the renminbi is also in line with market expectations.

After the SDR is added, the RMB restarts its depreciation?
On October 1, the RMB was officially included in the SDR basket of currencies, marking a milestone in the internationalization of the RMB. Zhang Tao, the new vice president of Chinese nationality at the IMF, said that the renminbi basket will help China's financial policy reform and will support China's ongoing reforms in monetary policy, foreign exchange market and financial system to help China better integrate into the international financial market. family.
However, some observers believe that after the renminbi has completed the steps to join the SDR, the official will also relax the regulation of the exchange rate.
Earlier, according to Hong Kong's Wind Info Agency, Huatai Securities Li Chao believes that China's existing foreign exchange management system has not undergone substantial changes due to the basket, so it is not appropriate to overstate the impact of the basket. From the official foreign exchange reserve data, the reserve in September decreased by 18.875 billion US dollars, but after the interest income and valuation impact, the official foreign exchange reserve decline in September may be even greater.
According to reports from CICC analysts Yu Xiangrong and Liang Hong, although the decline in foreign reserves has expanded, the outlook for the future may be further reduced due to foreign exchange intervention, but the situation is controllable.
"The depreciation of the renminbi is not inevitable," even if the devaluation is not too great.
According to the "First Financial Daily" report, Ding Shuang, chief economist of Standard Chartered China, believes that "China's foreign trade still has a competitive advantage. This is an important argument for supporting the renminbi's continued depreciation. It is expected that the global foreign exchange reserves in the next five years (China) Except for foreign exchange reserves, the proportion of RMB assets will increase from about 1% to about 5%.” Ding Shuang predicts that the RMB exchange rate will show two-way fluctuations in the context of stable current account surplus and capital account deficit.

Foreign exchange reserve brush 5 years new RMB exchange rate depreciation pressure increased
According to central bank data, China’s foreign exchange reserves at the end of September were 1,316.38 billion U.S. dollars, a decrease of 18.875 billion U.S. dollars from the previous month. In August, it was a decrease of 15.89 billion U.S. dollars. The US dollar was the third consecutive month of decline. This foreign exchange reserve data hit a new low since May 2011.
Zhao Yang, chief economist of Nomura China, said that the expansion of China's foreign exchange reserves was mainly due to the central bank's increase in the stability of exchange rate operations in September, by intervening in the foreign exchange market, selling dollars to stabilize the RMB exchange rate, thus sacrificing some foreign exchange reserves. Kay's macro report said that according to their estimates, the Chinese central bank sold about 27 billion US dollars in September to support the RMB exchange rate.
For the decline in foreign exchange reserves, Yao Shaohua, a senior economist at Hang Seng Bank, pointed out that there were three main reasons for the unexpected decline in foreign reserves in September. First, the G20 summit was held in Hangzhou in September, and the RMB officially joined the SDR on October 1. The People's Bank of China may use some foreign reserves to stabilize the RMB exchange rate. Second, the RMB exchange rate depreciated slightly in September, which may lead to some capital outflows. Third, mainland enterprises accelerated the pace of “going out”. Some of the capital was funded by foreign exchange reserves, which also led to a decline in foreign exchange reserves.

Sterling flashes increase market panic
The British pound against the US dollar plunged from 1.26 to 1.1841 on October 7 (last Friday), the lowest since March 1985, and the decline quickly expanded to 6.1%. Since then, the day's low has hit 1.1378, the pound against the dollar fell more than 1200 points in the day, the decline once reached 10%.
There are different opinions on the triggering factors of flash collapse. Some think that the bad economic fundamentals of the UK lead to currency depreciation; some think that the lack of liquidity leads to the stop-loss amplification iteration; some analysts say that the programmatic transaction leads to the stop loss. The lack of a disk has intensified the decline; more people in the circle believe that several hedge funds want to test the bottom line of the pound, just as Soros shorted the pound.

Economist: The Fed’s probability of raising interest rates in December is 70%
The number of non-agricultural employment in the United States increased by 156,000 in September. The market is expected to increase by 175,000. The previous value was revised to increase by 167,000. The unemployment rate in the United States in September was 5.0%, expected to be 4.9%, and the previous value was 4.9%. The US non-farm payrolls report, which was called “the most critical non-agricultural”, was mixed, with non-farm payrolls and unemployment rates falling short of expectations, but hourly average wages and average weekly hours increased, in line with market expectations.
After the US non-farm payrolls data was released in September, Cleveland Fed President Mestre said in an interview with CNBC that the US Labor Department’s report released on Friday was very consistent with the Fed’s expected economic situation, especially in line with her own expectations. She believes that the US employment growth in September is “stable, although it has slowed down from the previous month; the Fed’s rate hike is appropriate.

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