Director Of The PBOC’s Monetary Policy Department: The RMB/USD Exchange Rate Is Not A Decisive Exchange Rate Reflection

The State Council Information Office held a regular briefing on State Council policies today. Zou Lan, director of the Monetary Policy Department of the People’s Bank of China, said that people usually discuss more about the bilateral exchange rate of the RMB against the US dollar, but in fact, the exchange rate of the RMB against a basket of currencies can reflect the change of RMB value more comprehensively. From the perspective of macroeconomic operations, exchange rate fluctuations mainly regulate trade and investment in the real economy. Trade and investment are multilateral, relating to multiple countries and currencies. Therefore, changes in the RMB against a basket of currencies can reflect the impact of exchange rates on trade, investment, and the balance of payments. From the perspective of the exchange rate system, China implements a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies. The exchange rate of RMB against the US dollar is very important, but it is not an indicator reflecting all conditions of the exchange rate. It should also be viewed comprehensively and more attention should be paid to the changes in the exchange rate of RMB against a basket of currencies.