Public Announcement of the
People´s Bank of China on Reforming the RMB Exchange Rate Regime
July 21, 2005
With a view to establish and improve the socialist
market economic system in China, enable the market to fully play its role in
resource allocation as well as to put in place and further strengthen the
managed floating exchange rate regime based on market supply and demand, the
People´s Bank of China, with authorization of the State Council, is hereby
making the following announcements regarding reforming the RMB exchange rate
regime:
1. Starting from July 21, 2005, China will reform the
exchange rate regime by moving into a managed floating exchange rate regime
based on market supply and demand with reference to a basket of currencies. RMB
will no longer be pegged to the US dollar and the RMB exchange rate regime will
be improved with greater flexibility.
2. The People´s Bank of China will announce the
closing price of a foreign currency such as the US dollar traded against the
RMB in the inter-bank foreign exchange market after the closing of the market
on each working day, and will make it the central parity for the trading
against the RMB on the following working day.
3. The exchange rate of the US dollar against the RMB
will be adjusted to 8.11 yuan per US dollar at the time of 19:00 hours of July
21, 2005. The foreign exchange designated banks may since adjust quotations of
foreign currencies to their customers.
4. The daily trading price of the US dollar against
the RMB in the inter-bank foreign exchange market will continue to be allowed
to float within a band of ¡À0.3 percent around the central parity published by the People´s
Bank of China, while the trading prices of the non-US dollar currencies against
the RMB will be allowed to move within a certain band announced by the People´s Bank of
China.
The People´s Bank of China will make adjustment of the
RMB exchange rate band when necessary according to market development as well
as the economic and financial situation. The RMB exchange rate will be more
flexible based on market condition with reference to a basket of currencies.
The People´s Bank of China is responsible for maintaining the RMB exchange rate
basically stable at an adaptive and equilibrium level, so as to promote the
basic equilibrium of the balance of payments and safeguard macroeconomic and
financial stability.
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