China’s exchange rate I will just say a few words about the recent developments in China’s exchange rate, picking up on some of the points highlighted in the RBA Board minutes released yesterday, as well as my colleague Phil Lowe’s speech last week. 6 As you probably know, the Chinese authorities made a notable change to their foreign exchange rate regime on 11th August.
After briefly describing the proposed measures, I will first focus on the impact of the regulation on financial markets, then analyse the implications for economic activity and the financial system, and finally, turn to the implications for monetary policy, including the possible interactions with the central bank’s operational framework. 1.