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Zhou Qi Ren China Foreign Exchange Trade Center VS RMB price decision

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Zhou Qi Ren China Foreign Exchange Trade Center VS RMB price decision Powered By Docstoc
					Zhou Qi Ren: China Foreign Exchange Trade Center VS RMB price decision
Quoted from VISTA http://www.vistastory.com/article.php?id=5062
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Who decides the price of RMB
2010-06-12 author: Zhou Qi Ren
China's foreign exchange admission than other government agencies the
market cleaner. The same rules of the game anyway, we submit bids, the highest
bidder
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Quarrel shaking the world exchange rate, China's market in a form of. This
market is called the China Foreign Exchange Trading Center, based in Shanghai
Zhongshan North Road, Bund 15, a former bank site Russo. New York, London,
Tokyo foreign exchange market, which is different from the China Foreign Exchange
Trade Center is a physical market, relatively easy to observe. Coupled with short
history, to know what's not too much problem.
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Two tracks yuan for dollars
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1994 years ago, China has foreign exchange transactions, but not a unified market. At
that time, the demand for dollars renminbi exchange is achieved through two tracks.
The first track is planned orbit, that is, settlement by the Government's
official rate. Whether business or personal, with foreign exchange earnings, have to
more than 5 yuan against one U.S. dollar the price of the yuan, settlement to the
Government. RMB valuation so high, should be enough time, China's
foreign exchange earnings, the government hopes to lower the price acquired all of
the RMB exchange. However, such an abacus with a price, that is, who do not want
an active foreign exchange. Government low-cost purchase of foreign exchange, as
cheap purchase agricultural year, as efforts to reduce the incentive for producers to
stimulate.
Hygiene, forced to force opinions on the second track. Path roughly as follows: 80
countries from the last century, began to gradually increase the purchase of foreign
exchange premiums, and then launched the "foreign exchange
retention" system, which allows corporations to stay in a foreign exchange
rate (20%) of foreign exchange for personal use, and may put some of the foreign
exchange retention , got the "foreign exchange swap centers" to
see if no one bid higher than the official exchange rates. Lower than the true market
value because of "cheap foreign exchange," never a shortage of
demand is always strong. We offer you scramble, took an unscheduled raised the price
of foreign exchange swap. Two-tier foreign exchange came into being: more than 5
yuan foreign exchange premium against one U.S. dollar, the swap that can be 8 yuan,
9 yuan, or 10 yuan against one U.S. dollar! The latter is the market, because who
wanted more dollars, do not cry, would not have left the report of the right to fight for
approval, it wants to hold the yuan bid rules of the game is to bid high bidder dollars.
Tide of reform and opening up a blessing thanks to the foreign exchange market track
is gaining strength. By 1993, the eve of China's first exchange reform,
China 80% of total foreign exchange swap market that track, only 20% of the track
from the program. China's first exchange to change drastically the
completion of the merger of the two-track exchange rate, but also to spread all over
the pricing of foreign exchange swap centers scattered, integrated into a single bid of
the foreign exchange market, which is the origin of the China Foreign Exchange
Trading Center. Since then, the RMB exchange rate directly to an executive order to
end the era of pricing. Today's exchange rate, foreign exchange trading
center in the formation of this market.
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Economic characteristics of transition

China Foreign Exchange Trade Center is indeed a market. However, this market is
still a number of systems with characteristics of transition economies. I observed a
few years and found at least two features worthy of special attention. The first
characteristic is more obvious, the China Foreign Exchange Trade Center is a located
in the Chinese market only, no branches elsewhere in the world. This feature, different
from the world's major foreign exchange market. World, people not only
traded in the United States dollar, can be traded outside the United States dollar, as it
can in Europe and abroad, foreign exchange trading in Japan, like the euro or yen. But
the yuan's trading would be limited to China, the Chinese people in China,
foreign currency, foreign currency can be traded in China, but foreigners are not
traded outside China, the yuan can. The reason for appreciation outside the loud and
clear voice, because they had no way to get dollars for yuan! This regard, Hong Kong
is an exception. In the world's fifth largest foreign exchange market, since
2003, is legal to buy some of the renminbi. No exception is very high in Hong Kong
so there is no call on the RMB exchange rate, because no matter what the exchange
rate maintained that the Hong Kong General can act on the offer expressed in RMB.
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Another feature is more subtle. China Foreign Exchange Trade Center is a type of
market exchange, the implementation of membership. The legal right of all Chinese
foreign exchange operations of commercial banks and other financial organizations
(including its branch), Bank of China and Foreign Exchange Authority of the
examination and approval, can become a member of the China Foreign Exchange
Trading Center. Into China's foreign exchange, whether from trade surplus,
foreign direct investment, or so-called "hot money" are the first
of these members, "settlement", and then by the member
organizations of the China Foreign Exchange Trade Center that "inter-bank
market," the bidder auctions of foreign exchange positions of their
respective holders. Now the world's attention the "exchange
rate" is the China Foreign Exchange Trade Center members, to compete in
this market every day the results. In this sense, that the Renminbi exchange rate is
supply and demand in the market competition formed cogency.
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No super-privileged "special super" member
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However, the China Foreign Exchange Trading can join in all transactions among
members, there is a special super-member. This is the charge of China's
central bank foreign exchange market and foreign exchange authority. Here, like all
other members of the same, the central bank is allowed to purchase foreign exchange.
With "special super" qualifier, because the central bank is not
only the growing of China's foreign exchange market last buyers, and in
fact bought into the majority of China's foreign exchange. Readers often
heard long past 2 trillion, "China's foreign exchange
reserves", and all foreign exchange purchases by the central bank. To show
that members are still members of super special, because today no longer require the
compulsory settlement of China, the central bank bought the currency of most of the
approach, simply because of its highest!
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As a government organization, the central bank purchase of foreign exchange entering
big hands, this matter to think? In my view, the central bank Admission purchase of
foreign exchange, and other government agencies to market the procurement of goods,
not essentially different. Of course, in charge of the markets in their procurement
activities, referees and players, do have a role in the conflict. However, the good news
is transparent foreign exchange trading, foreign exchange transactions in China than
in other government agencies in general admission to the market cleaner. The same
rules of the game anyway, we submit bids, the central bank central bank may offer
another job. There is no super-privilege, the public has never been to this part of the
scandal-ridden.
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The problem is the purchasing power of the central bank purchase of foreign
exchange source. We know that the central bank is not a normal business organization,
no way to market through the sale of goods and services to generate revenue. Ministry
of Finance or the central bank nor the SAC, you can direct to business or personal tax,
or through the sale of state assets or rights to form their own purchasing power. The
central bank bought trillions of dollars paid by the amazing huge reserves of RMB,
and the "base currency" relevant. This is different from any
other central bank intervention of government agencies really so special.
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(From "the Economic Observer reported," No. 468)
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posted:8/17/2010
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