According to the latest news from the Bank of China, the central parity of RMB against the US dollar has been adjusted by 68 basis points. The purpose of this downward adjustment is to improve the ability of financial institutions to use foreign exchange funds. The reserve ratio in foreign exchange deposits of all the downgraded institutions is 1 percentage point, which means that the foreign exchange reserves have dropped from 9% to 8%. This means that I can improve the liquidity of the exchange rate, expand the spread between local currency and foreign currency, and further promote the stable development of the foreign exchange market.

The downward adjustment of the central parity of RMB against the US dollar by 68 basis points means that the RMB foreign exchange spread has expanded, which can effectively improve the domestic and foreign foreign exchange liquidity and further enhance our ability to use foreign exchange funds in banks. From this changed figure, we can also see the changes in foreign exchange patterns. The main purpose of this measure is also to promote the smooth operation of the foreign exchange market and stabilize the RMB exchange rate, which has a positive effect.

The downward adjustment of the central parity of the RMB against the US dollar is also closely related to the successive interest rate hikes announced by the Federal Reserve. The country is committed to raising the local currency interest rate and keeping it at a high level, thus reducing the inflation rate. However, with the large-scale decline of offshore RMB against the US dollar, the US dollar index continues to rise. This move does not mean that the renminbi is in a rapid depreciation trend, but that the fundamental resilience of the renminbi and the contraction period before super-tightening have declined, and the US dollar index has strengthened significantly. The spread between China and the United States has further deepened, and the margin of export support for the RMB exchange rate has been weakening.

Although there is still some depreciation pressure on the RMB, the central bank is actively adjusting and constantly stabilizing the exchange rate. As for the downward adjustment of the central parity of the US dollar, it is only short-term, and the central bank keeps releasing signals to stabilize the exchange rate. Although the external economy has a great influence on China's economic development, in the long run, the dollar is likely to appreciate in the later period, so there is no need to worry too much. The trend of China's economy is still stable, and RMB depreciation will only be short-term. Only by stabilizing the exchange rate can the foreign exchange market further develop steadily.