Recently, the exchange rate of the Chinese yuan against the US dollar has seen a slight decline. On September 20th, Zou Lan, Director-General of the Monetary Policy Department of the People's Bank of China, stated that the yuan's exchange rate against the US dollar is indeed crucial, but it does not represent the entirety of the yuan's exchange rate. It is important to pay greater attention to the fluctuations in the yuan's exchange rate against a basket of currencies.

        Zou Lan expressed that this year, the international situation has been characterized by complexity and volatility, leading to significant fluctuations in the global foreign exchange markets. People are paying keen attention to changes in the RMB exchange rate and its future trajectory. While discussions typically focus on the bilateral exchange rate between the RMB and the US dollar, in reality, the RMB's exchange rate against a basket of currencies can provide a more comprehensive reflection of currency value fluctuations.

         He elaborated by explaining that from the perspective of macroeconomic operations, exchange rate fluctuations primarily serve to adjust trade and investment in the real economy. Since trade and investment involve multiple countries and various currencies, the fluctuations in the RMB against a basket of currencies can provide a more comprehensive reflection of the impact of exchange rates on trade, investment, and international balance of payments. From the perspective of the exchange rate system, China adopts a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies. While the RMB's exchange rate against the US dollar is indeed important, it does not represent the entirety of the RMB exchange rate. It is essential to consider it comprehensively and pay more attention to changes in the RMB's exchange rate against a basket of currencies.

        Zou Lan explained that for tracking changes in the RMB's exchange rate against a basket of currencies, one can primarily focus on the RMB Exchange Rate Index published by the China Foreign Exchange Trading Center. This exchange rate index calculates the weighted average exchange rate of the RMB against a basket of foreign currencies, with the weights determined by the trade volume between China and the respective countries or regions. Currently, the index includes 24 basket currencies, accounting for over 60% of China's total trade volume, with the US dollar, Euro, and Japanese yen having significant weights of 19.8%, 18.2%, and 9.8%, respectively.

        Since mid-July, thanks to the steady recovery and improvement in the domestic economy, the RMB has exhibited stability with an upward trend against a basket of currencies. Due to the strengthening of the US dollar index, the RMB has depreciated against the US dollar in bilateral exchange rates, while maintaining relative strength against non-US dollar currencies.

          Zou Lan expressed that recently, a series of policies aimed at stabilizing the domestic economy and expectations have been introduced and implemented, leading to more positive marginal changes in macroeconomic performance. Simultaneously, in the process of responding to multiple external shocks, the People's Bank of China and the State Administration of Foreign Exchange have accumulated rich experience in coping and possess ample policy tools. They are capable, confident, and well-prepared to maintain the stable operation of the foreign exchange market.

        In the next phase, the People's Bank of China and the State Administration of Foreign Exchange will aim to keep the RMB exchange rate basically stable at a reasonable and balanced level. They will adopt a comprehensive approach, grounded in both the short-term and long-term considerations, to implement measures that correct deviations and stabilize expectations. They will resolutely counteract unilateral and pro-cyclical behaviors, take decisive actions to rectify market-disruptive conduct, and guard against the risk of exchange rate overcorrection.