Dong Wu Securities chief economist Lu Zhe: Renminbi may enter a new round of appreciation cycle.

At the Dongwu Securities 2026 annual strategy meeting held today, Dongwu Securities Chief Economist Lu Zhe pointed out that the rise in prices is crucial for economic growth and the capital market, and reasonable increases have favorable conditions in terms of consumer demand, monetary liquidity, and exchange rates. From the perspective of consumer demand, long-term population transformation, industrial transformation, and fiscal transformation are all conducive to driving up household income, and the simultaneous movement of population and consumption peaks in the next decade indicates a more optimistic total consumption volume. From the perspective of monetary liquidity, the central bank's initiation of government bond trading and the fiscal opening of "debt-for-equity swaps" are jointly promoting the transfer of fiscal deposits to residents and businesses, thereby driving the increase in M1 growth rate significantly over the past year, and the increase in M1 will drive the rebound in PPI. From the exchange rate perspective, benefiting from a solid commodity export base, the return of foreign capital to renminbi financial assets, and the initial signs of the weakening of the US dollar in the medium to long term, the renminbi may enter a new round of appreciation cycle.