Both onshore and offshore RMB exchange rates reclaim the '7.1' level.

On November 4, the renminbi rose significantly against the US dollar in both onshore and offshore markets. According to Wind data, as of 16:30 on the day, the onshore exchange rate of RMB closed at 7.0974, up 276 basis points from the previous trading day, and reached the highest intraday level of 7.0858, successfully breaking through the key level of 7.1.

The offshore yuan exchange rate also performed strongly, reaching an intraday high of 7.0870, also breaking through the 7.1 mark, with a maximum gain of nearly 500 basis points during the day. At press time, the offshore yuan exchange rate fluctuated slightly around 7.1.

For the rise of the RMB exchange rate, Zhu Hualei of Giufeng Investment Advisors analyzed that this is mainly affected by the weakening of the US dollar and China's counter-cyclical policy. These policies have improved market expectations, bolstered confidence in economic recovery and valuation repair, and attracted international capital inflows.

The dollar index also saw a correction on November 4, falling more than 0.50% to close at 103.7280. Nevertheless, since October, the dollar index has shown an overall upward trend, rising from around 100 at the end of September to around 104, a gain of 3.11% in one month.

Wen Bin of Minsheng Bank pointed out that the sharp rise of the US dollar index in October was related to the reduction of the Federal Reserve's interest rate cut expectations. Strong US economic data and higher than expected inflation have weakened market expectations for a rate cut.

Bloomberg's Timothy Tan believes the Fed may be the only institution that can provide relief, but rate cuts could have negative effects, such as arbitrage outflows, undermining liquidity support. Without a new source of liquidity, US financial stability could be threatened and the Fed might have to restart quantitative easing, which could lead to a sharp depreciation of the dollar.

Wen Bin expects that in the short term, the combination of interest rate reduction transactions and seasonal foreign exchange settlement demand will reduce the depreciation pressure on the renminbi. Zhu Hualei believes that the RMB exchange rate will fluctuate in a narrow range within a reasonable range in the short term, showing a steady upward trend.