Xinhua News Agency, Beijing, July 1st (Wang Ruoxi, Wang Enbo) The Bank of China Research Institute released the 'Outlook for Economic and Financial Development in the Third Quarter of 2025 Report' in Beijing on July 1st, pointing out that the pressure on the RMB exchange rate depreciation has been significantly relieved, and the exchange rate will basically stabilize at a reasonable and balanced level in the second half of the year.

The report states that in the first half of 2025, although affected by factors such as the United States' 'reciprocal tariff' policy, the RMB exchange rate faced significant depreciation pressure. However, with the important consensus reached in the high-level economic and trade talks between China and the United States, the RMB exchange rate against the dollar first depreciated and then appreciated. The onshore exchange rate appreciated, and the deviation from the midpoint was significantly narrowed, and the offshore exchange rate also明显 appreciated. As of June 25th, the three prices of the RMB exchange rate against the dollar - the midpoint, onshore spot, and offshore spot - have converged to about 7.17.

Looking forward to the second half of the year, the research team of Bank of China believes that the RMB exchange rate is expected to basically stabilize at a reasonable and balanced level. Under the impact of the aggressive policies of the United States, global funds are increasingly concerned about dollar assets as safe assets, and traditional hedging assets such as U.S. bonds and the dollar have been sold off to some extent. The high-level decline of the dollar index will alleviate the pressure on the RMB depreciation.

At the same time, China has accumulated rich and effective policy tools for stabilizing the exchange rate. In addition to the issuance of offshore central bank bills and the adjustment of cross-border financing macro-prudential regulatory parameters adopted earlier, measures such as adjusting the foreign exchange deposit reserve ratio, the forward sale of foreign exchange risk reserve ratio, and the macro-prudential regulatory coefficient for domestic enterprises' overseas lending can also be used to maintain exchange rate stability in the future.

The capital market warming up accelerates the inflow of overseas capital, which also plays a positive role in stabilizing the RMB exchange rate. Since last October, the trading volume of the Stock Connect (Hong Kong capital or foreign capital through the cross-boundary interconnectivity channel purchasing A-share) has significantly exceeded the previous level. The report states that this trend is still continuing, and it is expected that the inflow of foreign capital will provide support for maintaining the balance of international payments and exchange rate stability.