Fourth, the market-oriented reform of the RMB exchange rate has been advanced so as to keep the RMB exchange rate basically stable at an ad...
Fourth, the market-oriented reform of the RMB exchange rate has been advanced so as to keep the RMB exchange rate basically stable at an adaptive and equilibrium level. The PBC has exited from regular interventions in the foreign exchange market, and market supply and demand now play a decisive role in the formation of the RMB exchange rate. While giving play to the exchange rate as a pricing signal, it has enhanced the efficiency of resource allocation. The PBC has stuck to the market-oriented reform, enhanced the RMB exchange rate flexibility, given play to the exchange rate as an automatic stabilizer for the macro economy and the balance of payments, and promoted a balance between internal and external equilibria. The PBC has established and has continuously improved macro-prudential management for cross-border financing,
employed instruments such as the RRR for foreign currency deposits, and guided financial institutions to optimize management of foreign exchange assets. It has guided enterprises and financial institutions to be risk-neutral, enhanced expectation management, and maintained the smooth operation of the foreign exchange market. Since 2018, the RMB exchange rate has withstood a variety of major external shocks with enhanced flexibility and it has played its role as an automatic stabilizer for the macro economy and the balance of payments. The RMB exchange rate has witnessed appreciations and depreciations, moving in both directions and remaining basically stable at an adaptive and equilibrium level. From 2018 to 2021, there were 973 trading days on China’s foreign exchange market, during which the central parity of the RMB exchange rate against the US dollar appreciated on 485 days, depreciated on 487 days, and remained unchanged on one day.
At end-March 2022, the central 7 parity RMB exchange rate against the US dollar was 6.3482, appreciating 0.4 percent compared with the end of the previous year. Going forward, the PBC will continue to improve the framework for a modern monetary policy, promote high-quality development, and accelerate the building of a new development paradigm with domestic circulation as the mainstay and domestic and international circulation reinforcing each other.
No comments