Whats People's Bank of China up to??
The content of the managed floating exchange rate regime includes three aspects. First, the floating of exchange rate is based on market supply and demand so that the exchange rate plays a role as a price signal. Second, the range of floating adjustment is based on trade and current account balances to reflect the "managed floating" nature. Third, the exchange rate is determined with reference to a basket of currencies, rather than the bilateral exchange rate between RMB and any single currency.
I. A managed floating exchange rate regime based on market supply and demand is to achieve the general balance of the balance of payments account.
II. The Exchange rate floating is based on the current account, mainly the trade account balances
III. Measure the Exchange Rate with Reference to a Basket of Currencies