Economists predict that if the Federal Reserve cuts interest rates, it may induce Chinese companies to sell $ 1 trillion (approximately S $ 1.3 trillion) assets and promote the appreciation of RMB up to 10%.
According to the news of Bloomberg News (August 27), the CEO of the London Hedge Fund Eurizon Slj Capital LTD. and the proposed person of the "US dollar smile theory" Stephen Jen said in an interview with BloombergSince the epidemic, Chinese companies may have accumulated more than $ 2 trillion in offshore investment, and these funds have been parked in investment with yields higher than RMB assets.
He believes that once the Fed reduces the cost of borrowing, the attraction of US dollar assets will decline, and the difference between China and the United States will shrink, which may stimulate $ 1 trillion in funds to return to China, and this is still a "conservative estimate"In fact, the return funds may be more.
The Federal Reserve President Powell said last Friday (August 23) that the time for the United States to reduce policy interest rates has arrived.Ren Yongli believes that if U.S. inflation continues to decline, the Fed will cut interest rates more radical than market expectations.This trend, coupled with overestimated US dollars, double deficits in the United States, and the expectations of soft landing, has enhanced his confidence in the depreciation of the US dollar.
He believes that the end result may be a significant appreciation of the RMB against the US dollar.
