The central bank cuts the reverse repo rate to put pressure on the RMB exchange rate. The long-term outlook remains stable.

Xinhua News Agency, June 14, the people's Bank of China cut the seven-day reverse repurchase operating rate by 10 basis points to 1.9% on June 13. As a result, the spot and futures markets of domestic bonds generally rose sharply, while the RMB exchange rate fell. With regard to the possible impact of the "interest rate cut" on the RMB exchange rate, Zhou Maohua, a macro researcher in the Financial Markets Department of Everbright Bank, said that on the one hand, China is in a low inflation environment and the policy is "dominated by me". The focus of macro policy is to promote consumption and the recovery of domestic demand; on the other hand, the resilience of foreign trade and the long-term allocation value of RMB assets are highlighted, the flexibility of RMB exchange rate is significantly enhanced, and the impact of the external environment is limited. Although the "interest rate cut" has triggered capital outflows in the short term, put pressure on the RMB and intensified exchange rate fluctuations, in the long run, the cut in policy interest rates is expected to stimulate economic recovery, boost market confidence and stabilize the RMB exchange rate. (Shanghai Securities News)