The RMB exchange rate is controlled by the Bank of China, mainly in three aspects:
The first is the membership system. The foreign exchange trading center is a membership system, and its members are mainly domestic commercial banks, including four joint-stock city commercial banks. Not sure if there is a finance company. There is a list of members on the website, and interested people can check it themselves. There are also some foreign banks, but their share is very small. The protagonists in this market are the four major banks. With so many people talking about "currency wars", it is unlikely that foreign forces will attack the RMB exchange rate at this time, because if they are not members, they cannot trade RMB. The application for membership requires the approval of the central bank. In extraordinary times, new traders will naturally not be approved.
The second is the trading mechanism. That is, adjust with reference to a basket of currencies. First of all, the RMB is still pegged to the US dollar, that is, the bank quotes the exchange rate of the RMB against the US dollar, and the exchange rates of other currencies are calculated by the international exchange rate of the US dollar and this currency. The second is the quotation. Before the market opens every day, members will quote the exchange rate of RMB against the US dollar to the central bank according to their own foreign exchange settlement and positions. According to the member's quotation, the central bank uses some method to calculate a middle price announcement as the benchmark for today's trading. I don't know what this formula is, but the central bank's answer is vague, saying that all factors will be considered comprehensively. But historically, it is mainly based on the quotations of members, and then consider the political pressure from the United States. Finally, trading, on the basis of this middle price, members start trading today. But pay attention to the fluctuation limit! At first, the fluctuation range was less than 0.5%, then it was reformed to 1%, and now it seems to be 2%. Such a trading mechanism will basically not have the ups and downs of exchange rate trading. Many people may wonder that 2% is so small, which is not a good idea. In fact, the principal of inter-bank foreign exchange transactions is very large, and it is normal to have several hundred million at a time. Unlike we go to the bank counter to buy foreign currency, we don't care much about the third place after the decimal point, or even the second place after the decimal point. But the influence of the third place after the decimal point on hundreds of millions of transactions is millions, which is very important for banks.
The third is central bank transactions. Banks have to level their foreign exchange positions every day, selling more and buying less, which creates the demand for mutual trading. But even this would not be enough Transactions between members are not fully managed, and the central bank should also participate. The central bank has a special department in Shanghai to deal with this kind of transaction, and every day it buys back all the extra dollars sold by its members. Here comes the problem. First, why are people willing to sell to the central bank in a freely traded market? The answer is that the central bank can't let banks sell through administrative orders, just because the central bank has the highest bid. Second, why did the central bank bid the highest, or what did it buy with? The answer is printed RMB, which can be bought at a high price because of its low cost. Therefore, the so-called passive issuance of banknotes by the central bank comes from here. I have seen tuba talk about compulsory settlement and sale of foreign exchange on Zhihu more than once. Compulsory settlement and sale of foreign exchange is out of date, okay? Therefore, when China's foreign trade is very good, enterprises hold a lot of foreign exchange and sell it to banks in large quantities, and banks sell a lot of foreign exchange, the central bank can only passively eat a lot and push up the exchange rate all the way.
The combination of the above three points forms a managed floating exchange rate system. The exchange rate is floating, which is different and changing every day, and this change is driven by the market and the result of fair trading by traders. But the change is moderate and under the control of the central bank. Who can trade, how to trade, what is the price basis of the transaction, what is the transaction amount, and what is the range. The central bank has set the tone before, during and after, so it is managed.
Hope to adopt!