Beijing, June 22nd, on the 22nd, was the second trading day after the People’s Bank of China reaffirmed the exchange reform. The central parity of the RMB exchange rate changed yesterday’s unshaken situation, and the central parity of the US dollar rose above the 6.80 mark, setting a record in July 2005. The new high since the exchange reform.
        According to the central bank’s announcement, the median exchange rate for the US dollar and other currencies in the interbank foreign exchange market on June 22 is: US$1 to RMB6.7980, 1 euro to RMB8.3816,100 to RMB7.4740, and HK$1 to RMB 0.87443 yuan, 1 pound against 10.0372 yuan.


        On June 21, the central parity of the renminbi against the US dollar was reported at 6.8275, which was the same as the previous trading day.


        The Central Bank spokesman said on the 19th that according to the domestic and international economic and financial situation and China's international balance of payments, the People's Bank of China decided to further promote the reform of the RMB exchange rate formation mechanism and enhance the flexibility of the RMB exchange rate.


        Zhao Xijun, deputy dean of the School of Finance and Finance at Renmin University of China, said: “The change in the middle exchange rate on the 22nd is to further advance the reform of the exchange rate formation mechanism. With reference to the concrete embodiment of a basket of currency adjustments, the future exchange rate will further reflect the impact of market supply and demand.”


        At the close of the spot market for quotation yesterday, the renminbi closed at 6.7976 against the U.S. dollar, hitting a new high since the exchange rate reform in 2005, which was close to the daily floating limit of five thousandths of an inch. On the 22nd, the central parity exchange rate between the RMB and the US dollar was similar to the spot price quoted market quotation on the 21st, indicating that the central parity exchange rate of the RMB further reflects the supply and demand in the market.


        After the outbreak of the financial crisis, the RMB exchange rate adopted a mechanism that substantially pegged to the US dollar, and the volatility of the central parity rate of the US dollar exchange rate was significantly narrowed. Since the beginning of this year, the central parity of the RMB against the US dollar has been operating within the range of 6.826 to 6.828. The exchange rate change on June 22 shows that the RMB exchange rate flexibility has increased significantly.


        Liu Yuhui, director of the China Economic Evaluation Center of the Institute of Finance of the Chinese Academy of Social Sciences, believes that “in the short term, investor sentiment may exert pressure on the appreciation of the RMB exchange rate.” This is from the spot market in the spot market yesterday and overseas non-funding reflecting the appreciation of the RMB. This is reflected in the forward delivery market (NDF). “


        A spokesperson for the Central Bank recently pointed out that it will continue to dynamically manage and adjust the floating exchange rate of the RMB according to the published floating range of the exchange rate of the foreign exchange market.


       According to the current regulations, the transaction price of RMB against the US dollar in the inter-bank spot foreign exchange market will fluctuate by 5 parts per 1,000. Dynamic management according to this interval will help avoid large fluctuations and overshoots of the RMB exchange rate.


       Zhao Xijun said: "Spectral behavior usually has short-term effects. In the long run, due to uncertain factors in the supply and demand of the market, it is difficult to determine the future trend of the exchange rate. It is expected that the RMB exchange rate will further reflect the characteristics of two-way floating in the future."


       In fact, from the spot market on the morning of the 22nd, due to the increase in US dollar buying, the spot price of RMB against the US dollar has declined. At 10:30, the inquiry system was quoted at 6.8126 against the U.S. dollar.


       Experts believe that since the beginning of last year, China’s international balance of payments has been increasingly balanced, and that the current exchange rate of RMB is not much different from the equilibrium level, so there is no basis for significant fluctuations in RMB.