Since the 'dovish statement' made by the Fed on 17th March, the dollar index slumped drastically while the RMB central parity increased substantially, however, since 18th March, China’s central bank has lowered the central parity continuously and today (28th March), RMB continues to devalue, sparking widespread discussion in the market, ANBOUND’s research team is of the view that the conspiracy theory of China devalues RMB to make more room for the reform of exchange rate regime does not hold water at all.

If the reform of the exchange rate regime is aiming at weakening RMB, this will only prompt more capital flight and this is not in line with China’s current interests.

The recent fluctuations in RMB exchange rate has more to do with the inclusion of RMB into SDR basket than with USD.