The RMB exchange rate formation mechanism before 1994. From the founding of New China to before the reform and opening up, under the traditional planned economic system, the RMB exchange rate was strictly managed and controlled by the state.

According to the needs of economic development in different periods, my country's exchange rate system before reform and opening up went through the single floating exchange rate system in the early days of the founding of New China (1949-1952), the single fixed exchange rate system in the 1950s and 1960s (1953-1972), and the A single floating exchange rate system (1973-1980) calculated based on a "basket of currencies" after the Dayton Woods System.

After the Third Plenary Session of the 11th Central Committee of the Communist Party of China, my country has entered a new period of reform and opening up in the transition to a socialist market economy.

In order to encourage foreign trade companies to export, my country's exchange rate system has changed from a single exchange rate system to a dual exchange rate system.

It has experienced two exchange rate dual-track periods, when the official exchange rate and the internal settlement price of foreign exchange for trade coexisted (1981-1984), and the official exchange rate and the foreign exchange adjustment price coexisted (1985-1993).

Among them, the development of the foreign exchange adjustment market based on the foreign exchange retention system has played a positive role in promoting the export earnings of enterprises, the balance of foreign exchange payments of foreign-invested enterprises, and the central bank's regulation of currency circulation.

However, as my country's reform and opening up continues to deepen, the drawbacks of the RMB dual-track system in which the official exchange rate and foreign exchange adjustment prices coexist have gradually emerged.

On the one hand, the coexistence of multiple exchange rates has caused chaos in the foreign exchange market and encouraged speculation; on the other hand, the existence of a long-term foreign exchange black market is not conducive to the stability of the RMB exchange rate and the credibility of the RMB.

The urgency of reforming the foreign exchange system has become increasingly prominent.

The RMB exchange rate formation mechanism from 1994 to 2005. In November 1993, the "Decision of the Central Committee of the Communist Party of China on Several Issues Concerning the Establishment of a Socialist Market Economic System" passed by the Third Plenary Session of the Fourteenth Central Committee of the Communist Party of China required that "reform the foreign exchange system and establish

A managed floating exchange rate system and a unified and standardized foreign exchange market based on market supply and demand have gradually made the RMB a convertible currency. "In December 1993, the State Council officially promulgated the "Notice on Further Reform of the Foreign Exchange Management System", adopting the following measures.

A series of important measures have been adopted, including the integration of the official RMB exchange rate and the foreign exchange adjustment price; the establishment of a single, managed floating exchange rate system based on market supply and demand; the abolition of foreign exchange retention and the implementation of a foreign exchange settlement and sales system; the establishment of a unified national

foreign exchange market, etc.

On January 1, 1994, the official RMB exchange rate and the foreign exchange adjustment price were officially integrated, and my country began to implement a single, managed floating exchange rate system based on market supply and demand.

Enterprises and individuals buy and sell foreign exchange to banks in accordance with regulations, and banks enter the inter-bank foreign exchange market for transactions, forming a market exchange rate.

The central bank sets a certain exchange rate floating range and maintains the stability of the RMB exchange rate by regulating the market.

Before 1997, the RMB exchange rate rose steadily, and confidence in the RMB at home and abroad continued to increase.

However, due to the outbreak of the Asian financial crisis, in order to prevent the currency depreciation of neighboring Asian countries and regions from deepening the crisis, China, as a responsible big country, took the initiative to narrow the floating range of the RMB exchange rate.

As the impact of the Asian financial crisis has gradually weakened, my country's economy has continued to develop steadily, steadily and rapidly in recent years. The reform of the economic system has continued to deepen. Reforms in the financial sector have made new progress. Foreign exchange controls have been further relaxed. The depth and breadth of the construction of the foreign exchange market have continued. Expansion has created conditions for improving the RMB exchange rate formation mechanism.

The Party Central Committee and the State Council introduced reforms to improve the RMB exchange rate formation mechanism on July 21, 2005.

The content of the reform is that the RMB exchange rate will no longer be pegged to the single dollar, but will be based on the actual situation of my country's foreign economic development.

According to the calculation of the reasonable equilibrium level of the exchange rate, the RMB appreciated by 2% against the US dollar on the same day, that is, 1 US dollar exchanged for 8.11 yuan.

Over the past two months, the RMB exchange rate system has been transitioning in an orderly manner and operating smoothly.