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Article: A look at China's new exchange rate regime.
- Article from:
- FRBSF Economic Letter
- Article date:
- September 9, 2005
- Author:
CopyrightCOPYRIGHT 2005 Federal Reserve Bank of San Francisco. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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On July 21, 2005, after more than a decade of strictly pegging the renminbi to the U.S. dollar at an exchange rate of 8.28, the People's Bank of China (PBOC 2005a) announced a revaluation of the currency and a reform of the exchange rate regime. The revaluation puts the renminbi at 8.11 against the dollar, which amounts to an appreciation of 2.1%. Under the reform, the PBOC will incorporate a "reference basket" of currencies when choosing its target for the renminbi.
The announcement stated that the changes were made "[w]ith a view to establish and improve the socialist market economic system in China, enable the market to fully play its role in resource ...