For the purpose of further improving RMB exchange rate mechanism, the People’s Bank of China recently released the Circular of the People’s Bank of China on Relevant Matters Concerning the Management of Exchange Rates for Transactions in Interbank Foreign Exchange Markets and the Listed Exchange Rate of Banks (Yinfa [2014] No. 188, hereinafter referred to as “the Circular”).

The major contents of the Circular include: Firstly, the management of the banks over the spread of the listed USD trading of clients is cancelled, and the banks can make independent pricing based on market supply and demand so as to promote the independent pricing of foreign exchange market; Secondly, based on the new development of management of central parity formation approach of RMB against certain currencies and the floating band of transaction price since 2011, transparency of policies have been further improved.

The Circular shall take effect as of the date of promulgation.(End.)