The change of the central parity of RMB against USD has drawn wide
attention both in China and abroad. At the beginning of 2017, the foreign
exchange market has a certain pro-cyclicality, and market players are
vulnerable to irrational expectations. T...
The change of the central parity of RMB against USD has drawn wide
attention both in China and abroad. At the beginning of 2017, the foreign
exchange market has a certain pro-cyclicality, and market players are
vulnerable to irrational expectations. The People's Bank of China (PBC)
adjusts the formula for calculating its daily yuan reference rate at May 28,
2017. PBC introduces the counter-cyclical adjustment factor aiming at
reducing the herd behaviour in the foreign exchange market. However, the
counter-cyclical adjustment factor led to the rapid appreciation of the
central parity of RMB against USD. This article summarizes the contents
and characteristics of the current central parity of RMB against USD
formation mechanism, and analyzes the influencing factors of the RMB
central parity formation mechanism.