China's RMB exchange rate system is a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies.
Therefore, the exchange rate of RMB against the US dollar is mainly determined by the market supply and demand, and it is managed at the same time, which shows that the exchange between RMB and foreign currency is managed, and the settlement and sale of foreign exchange transactions need to comply with the relevant provisions of foreign exchange policy. The settlement and sale of foreign exchange transactions are based on the actual needs of customers, and the central bank will also regulate the RMB exchange rate.
At present, the RMB exchange rate is floating, and its price is generated in China Foreign Exchange Trading Center. The participating institutions of foreign exchange trading centers are mainly large financial institutions. The source of funds for the transaction is the foreign exchange settlement and sale business done by major bank customers. The trading positions of customers' foreign exchange settlement and sale are all collected by the head offices of major banks, and the trading department of the head office balances the remaining positions through the foreign exchange trading center. When the trading positions of all trading members are in the same direction, it will lead to excessive exchange rate changes, and then the central bank will enter the market to stabilize the RMB exchange rate.
The trading hours of China Foreign Exchange Trading Center are from 9: 30 a.m. to 4: 30 p.m. every day, so the exchange rate between the US dollar and RMB fluctuates during this time.
With the internationalization of RMB, the offshore market has also launched the exchange transaction between RMB and USD. Offshore market transactions are more market-oriented than the domestic market, but the pricing power of RMB is still controlled in the domestic market.