PBOC: China Implements a Managed Floating Exchange Rate Regime Based on Market Supply and Demand, Referencing a Basket of Currencies

36Kr reports that the PBOC's policy stance on RMB exchange rates states that China implements a managed floating exchange rate regime based on market supply and demand, referencing a basket of currencies. The Chinese exchange rate system has the following characteristics: First, it insists on allowing the market to play a decisive role in exchange rate formation. Second, it focuses on preventing short-term sharp fluctuations in exchange rates, especially short-term rapid depreciation that could affect financial stability. The People's Bank of China uses macro-prudential management tools for adjustment and expectation guidance in specific scenarios, such as sudden outbreaks like pandemics or major external shocks like the April 2025 tariff war, and may directly intervene in foreign exchange markets under extreme circumstances to correct market herd effects and irrational expectations, particularly self-reinforcing irrational depreciation expectations, preventing destructive short-term overshooting of exchange rates. Third, it continuously enhances the transparency of exchange rate policies.