ABSTRACT
The foreign exchange market is a market in which participants are able to buy, sell, exchange, and speculate on currencies. The foreign exchange market is a major component of the financial market. In order to adapt to economic globalization and renminbi (RMB) internationalization, China moved into another new managed floating exchange rate system in July 2005. In April 1994, a new interbank system called the China Foreign Exchange Trading System (CFETS) was set up in Shanghai, formally establishing China's interbank foreign exchange market. The interbank foreign exchange market, the offshore exchange market in Hong Kong, and the major Chinese currency exchange markets have gradually been developed and refined over the past years. The exchange rate policy refers to the measures and methods of a country's monetary authorities to achieve certain policy objectives and the establishment and adjustment of the exchange rate adopted, including two aspects: the choice of exchange rate regime and the adjustment of the exchange rate level.
