First of all, it is conducive to further promoting the return of the RMB to a balanced exchange rate. Since the exchange rate reform, the central parity rate of RMB against the US dollar has appreciated by more than 30%, and the exchange rate of RMB against the US dollar has basically become balanced. At present, the development of China's foreign exchange market tends to be mature, the ability of independent pricing and risk management of trading subjects is increasing day by day, and the expectation of RMB exchange rate changes is beginning to differentiate, which is a good time window to start the reform.

Secondly, it is conducive to promoting the marketization of RMB exchange rate, promoting the price discovery of RMB exchange rate, perfecting the construction of a managed floating exchange rate system based on market supply and demand and referring to a basket of currencies, and laying the foundation for the final realization of RMB exchange rate floating freely.

Third, it is conducive to promoting the internationalization of the RMB. An effective and flexible exchange rate formation mechanism determined by market supply and demand is a necessary prerequisite for RMB internationalization and capital account opening. According to international experience, under the condition that the exchange rate can not flexibly reflect the market supply and demand, the opening of capital account will lead to very violent capital flow and easily lead to great financial risks. The relaxation of RMB exchange rate fluctuation is an important step in the process of RMB internationalization, which will further accelerate the pace of RMB internationalization.

Fourth, it is conducive to curbing the large-scale flow of short-term capital. Most other currencies in the world fluctuate between 5% and 20% against the US dollar. Because the volatility of RMB is too low, short-term funds speculating RMB appreciation get attractive low-risk income, which intensifies the inflow of hot money. Once the exchange rate flexibility increases, the risk of speculating RMB exchange rate will definitely increase, which makes international hot money have to weigh the risks and be more cautious about entering the China market. Exchange rate flexibility itself can effectively restrain the sustained large-scale flow of short-term capital.

Hunan Foreign Trade Network also pointed out that the negative impact of expanding the RMB on the floating range of the US dollar cannot be ignored.

First of all, it will increase the exchange rate risk of some export processing enterprises; Secondly, the pressure on banks to manage foreign exchange assets has increased; Third, international short-term capital may flow out on a large scale. The fluctuation of RMB exchange rate against the US dollar has increased, and the international short-term capital risk has increased. It is not ruled out that the concentrated and greatly accelerated outflow will have a certain impact on China's economy; Fourth, after the RMB exchange rate reaches equilibrium, the pressure of passively putting in the base currency through foreign exchange holdings may disappear, which will affect the original channels of the market base currency; Fifth, it is not ruled out that after the fluctuation range of RMB against the US dollar is expanded, the appreciation space of RMB will be enhanced, because the trend of RMB appreciation has not fundamentally changed. Sixth, it will be more difficult to formulate and implement the central bank's monetary policy.

Expanding the floating range of RMB against the US dollar has advantages and disadvantages, but generally speaking, the advantages far outweigh the disadvantages. This is the threshold that RMB internationalization must pass, and it is imperative. The reform of RMB exchange rate formation mechanism in the future should also be combined with the reform of interest rate marketization. Only the marketization of interest rate can establish a flexible response mechanism in the coordination of exchange rate and interest rate policies and realize the internal and external balance of the economy. There is reason to believe that the negative impact of RMB exchange rate reform will soon be eliminated as long as all parties consider comprehensively, respond promptly and take comprehensive reform measures.