What If RMB Basket Is Added To The Won?

The rebound in the past few days has surprised the market.

Although many market participants feel nonsensical, at the 6.7 juncture, the two sides really launched a considerable battle.

At this point, the central parity of RMB has also opened up significantly. Most of the bank's forecasting models show that the recent RMB central parity is significantly stronger than the model prediction results.

At this time, the question is whether the central bank has not followed the central parity pricing mechanism to avoid the weakening of the renminbi.

This possibility exists, of course, but one problem we may be overlooking is whether the RMB index has been adjusted in the near future. Such speculation is not groundless, because in the past month, there has been a variable in the RMB index: won.

The direct paction between the RMB and the Korean won began in June 27th, because the trade volume between Korea and China is larger, and the won's entry into the RMB basket is beyond doubt.

Based on this assumption, we can make a calculation.

South Korea is the fourth largest in China.

Second only to the European Union, the United States and Japan, the total trade volume is the same as that of fifth Hongkong, and the gap between Japan and the third is not large.

According to previous market estimates, if will

The weight of the basket will be around 10%.

According to the current weight of US $26.4%, euro 21.3%, yen 14.6% and Hong Kong dollar 6.5%, the Korean won has a greater proportion than Hong Kong dollar, so the 10% estimate is reasonable.

Of course, the biggest possibility is that the weight of the first four currencies may be adjusted underground.

Then there is an interesting situation: since June 27th, the performance of the won has been exceptionally strong. Its appreciation against the US dollar, the euro and Hong Kong dollar has risen by about 4%, and the Japanese yen has appreciated by about 8%.

If such speculation is established, the strong resonance of the RMB at around 6.7 reflects the result of entanglement of various factors. On the one hand, in this position, the central bank needs to manage the renminbi's empty sentiment and on the other hand, a new currency is added to the basket, and maintaining the stability of the basket is also a policy intention to be conveyed.

In other words, if the Korean won enter the basket of RMB, assuming that its weight is 10%, it should push the RMB index up to at least 0.4% in the past month.

So far, according to the existing basket calculation, the RMB index has just returned to the level around the end of June, which means that if the RMB basket is added to the won, the renminbi may need to further appreciate against the US dollar in the future to maintain the stability of the basket.