RMB exchange rate

The Exchange Rate of Chinese Yuan Renminbi

The Chinese Yuan Renminbi (or simply Renminbi) is the official currency of Peoples Republic of China, and also is one of the most important currencies in the world. The exchange rate is the price of a given currency in terms of another currency, and it reflects the relative values of the two currencies. The Chinese Renminbi exchange rate is not determined freely by the market. Instead, the price of Renminbi is set by the Peoples Bank of China (PBOC) in reference to a basket of foreign currencies.

The Chinese government has a strong control over the Chinese Yuan Renminbi. Because of the increased global economic integration, the exchange rate of Renminbi is monitored almost daily by the central bank, and often adjusted when necessary. The major foreign currencies that affect the exchange rate of Renminbi include the US dollar, Euro, Japanese Yen and British pound. The central bank also carefully studies the markets to determine the proper exchange rate at each moment.

The exchange rate of Chinese Renminbi has been on an upward trend for years and the currency appreciated greatly from 2006 to 2011. This was partly due to the Chinese central banks monetary policy and its determined efforts to maintain a relatively stable exchange rate. In recent years, there has been some fluctuation on the Renminbi exchange rate due to the external economic changes, but it is still on an overall upward trend.

Furthermore, Chinese Renminbi is an important currency used in the international trade payment system. As the trading partner of many countries, the exchange rate of Chinese Renminbi has a great effect on its trade balance with the nations. As the currency of a major export nation, the stability of Renminbi exchange rate can attract foreign capital as well as encourage export in order to boost economic growth. As a result, it is crucial to maintain the stable exchange rate of Chinese Renminbi.

In conclusion, the exchange rate of Chinese Yuan Renminbi plays an important role in the global economy. China is committed to keeping a stable Renminbi exchange rate and to keep the currency on an upward trend. As the second largest economy in the world, understanding the influence of Renminbi exchange rate is essential for all countries in the global market.

China has always maintained a stable exchange rate policy. The Renminbi exchange rate policy is formed by the combination of managed float system and Foreign Exchange Market. The managed float system has the following three objectives: stabilizing the Renminbi exchange rate, maintaining the stability of the international balance of payments and promoting the sustainable development of the economy.

The expansion and contraction of Chinas foreign exchange reserves need to be able to effectively resist external shocks, to maintain the basic stability of the RMB exchange rate. The foreign exchange market directly determines the actual exchange rate of the Renminbi and the level of foreign currency exchange rate reflecting the market demand.

The Renminbi exchange rate is affected by a variety of factors, including the international balance of payments, the balance of capital flows, domestic and foreign economic fundamentals and investorsassessments. Interventions are hindered by the level of foreign exchange reserves, macroeconomic policies and their effects on the domestic economy and capital flows.

The Peoples Bank of China will actively implement prudent monetary policies and maintain continuity and stability, monitoring and analyzing the changes of domestic and foreign macro markets, to prevent and solve problems, so as to promote the sustained, balanced and healthy economic development of social economy. The goal of controlling money supply and credit is to maintain the stability of the Renminbi exchange rate.

Despite the relative stability of the Renminbi, it remains the prerogative of Chinas central bank to make adjustments within a range that reflects the use of a managed float system that is based on market fundamentals and influences. Thus, the fluctuations of Renminbi should be expected in accordance with the changing market dynamics which will help the renminbi to remain relatively stable.