Public Announcement of the People´s Bank of China on
Enlarging the Floating Band of the RMB Trading Prices against the US Dollar in
the Inter-bank Spot Foreign Exchange Market
May 18, 2007
With a view to further improving the managed floating
exchange rate regime based on market supply and demand with reference to a
basket of currencies, promoting development of the foreign exchange market and
strengthening the pricing and risk management capabilities of financial
institutions, the People´s Bank of China has decided to enlarge the floating
band of the RMB trading prices against the US dollar in the inter-bank spot
foreign exchange market and is hereby making a public announcement as follows:
Effective May 19, 2007, the floating band of RMB
trading prices against the US dollar in the inter-bank spot foreign exchange
market is enlarged from 0.3% to 0.5%, i.e., on each business day, the trading
prices of the RMB against the US dollar in the inter-bank spot foreign exchange
market will float within a band of ¡À0.5 percent
around the central parity publicized on the same day by the China Foreign
Exchange Trading System.
The administrative rules governing the floating band
of the RMB trading prices against non-US dollar currencies in the inter-bank
spot foreign exchange market and the spread between the RMB/USD selling and
buying prices quoted by the foreign exchange-designated banks remain unchanged,
i.e. the Circular on Further Improving the Management of the Trading Prices
in the Inter-bank Foreign Exchange Market and the Quoted Exchange Rates of the
Foreign Exchange-Designated Banks (PBC Document No. [2005] 250) released on
September 23, 2005 is still valid.
The People´s Bank of China will continue to fulfill
its responsibilities in relation to the exchange rate in light of the domestic
and international economic and financial conditions, and keep the exchange rate
basically stable at an adaptive and equilibrium level based on market supply
and demand with reference to a basket of currencies so as to promote a general
equilibrium of the balance of payments and safeguard stability of the overall economy
and the financial markets.
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