RMB Exchange Rate: Regimes and Policy Issues
The PBOC announced a decision to implement a market-based determination mechanism of the official fixing rate of RMB against US dollars in order to enhance the marketing and standard value of RMB on August 11, 2015. In the following three days, the official fixing rate of RMB against US dollar fell 4%. The release of the de-value pressure stimulates panic. In the expectation of de-valuation, the exchange rate volatility has increased and gap between the onshore and offshore exchange rate has further widened. The central bank faces greater difficulty in exchange rate regulation.