Hu Xiaolian: The trend of RMB exchange rate policy

The goal of the transfer is not to achieve a level of exchange rate, but to create a mechanism through reform, so that the level of exchange rate can basically reflect market supply and demand conditions, and conducive to the promotion of the basic balance of international payments "Caixin net" (reporter Mr IP wang Shuo Horon) August 2 Published "New Century" In the form of a cover article, The weekly magazine published an interview with Hu Xiaolian, vice governor of the People's Bank of China, and analyzed the ins and outs of the June 19 exchange rate reform in detail.　　The goal, Hu said, is not to reach a specific level of exchange rates, but to create a mechanism that reflects the market. "New century": June 19, 2010, the People's Bank of China decided to further promote the reform of the RMB exchange Rate mechanism to enhance the flexibility of the RMB exchange rate. Why choose this time?　　We understand that this is continuing in the right direction, right? Hu Xiaolian: So to speak. China carries out a floating exchange rate system based on market supply and demand, with reference to a basket of currencies, which is the inevitable choice for China to take the market economy path. This has been made clear in the 14 session of the Communist Party of China in 1993 and is now continuing in this direction. Plenary In the July 2008, in the context of the global financial crisis, in response to a possible global economic recession, the renminbi temporarily narrowed float, now the overall recovery of China's economic momentum is solid, fundamental institutional reform should continue, this is the most important reason.　　In addition, the export situation has gradually improved, the absolute volume of exports back to pre-crisis levels, but also one of the considerations. "New century": how to understand the starting point of the change? Should we start with the January 1, 1994 exchange rate?　　It was a long walk and a stop. Ms. HU: Yes, the managed floating exchange rate system was officially launched in 1994.　　When the new merger, the renminbi against the United States dollar exchange rate is 8.7 yuan/USD, by the 1997 Asian Financial [2.92-0.68%] crisis deepened, the renminbi against the U.S. dollar nominal exchange rate has risen by nearly 5% to 8.3 yuan/USD, indicating that the RMB exchange rate has been floating over the past few years. The Asian financial crisis of 1997 slowed the process of reform. At that time, China to prevent the spread of the crisis announced the renminbi does not depreciate, and narrow exchange rate range, the exchange rate stabilized at 8.28 yuan/dollar level. After the Asian financial crisis in the past, the face of China's accession to the World Trade Organization, the United States suffered "9? 11 "After the events of the world economic weakness and other new situations and factors, in order to reduce uncertainty, the RMB exchange rate volatility narrowed for a long time."　　But this is a phased policy, not a systematic arrangement. In the following years, with the reform of large financial institutions basically deployed, enterprises, especially the state-owned enterprise reform has made positive progress, a group of large enterprises have been listed in the domestic and foreign, the opportunity and conditions for continuing exchange rate reform has matured. Thus, from July 21, 2005 onwards, the exchange rate system to further improve the implementation of market supply and demand as the basis of reference to a basket of currencies to regulate, managed floating exchange rates system. This is 19.Continuation of the 94 exchange. June 19 This year is the further deepening of the exchange reform.　　In the future, with the development of international economic and financial situation, we may face new challenges, we will follow the established policy, and constantly improve the reform of the RMB exchange rate formation mechanism.　　New century: Is there a specific step and timetable for the reform of the exchange rate formation mechanism? Ms. HU: There is no timetable for change.　　Because the exchange rate to what level is reasonable, is a controversial issue, there is no clear answer.　　The goal is not to achieve a level of exchange rate, but to create a mechanism through reform, so that the level of exchange rate can basically reflect market supply and demand conditions, and conducive to the promotion of the basic balance of international payments. New century: At present, the daily fluctuation range of RMB against the dollar is 0.5%. Some market participants suggested a widening of the daily volatility. Does the central bank have such a plan?　　What are the main factors to be considered in the adjustment of daily volatility? Ms. HU: I think the current volatility of 0.5% is more appropriate.　　From the perspective of development, it is possible to continue to expand in the future, this can be studied and discussed, but at present it is more appropriate. June 19 to further advance the exchange rate, the largest daily volatility of the renminbi against the dollar is 329 basis points, the smallest is 34 basis points, the average amplitude of more than 90 basis points, has been compared between July 2005 to July 2008 Average daily volatility of more than 70 points significantly enlarged. We all see an increase in volatility, which is mainly determined by the market.