Analysis And Management Of The Risks In RMB-FX Trading Business After The Reform Of RMB Exchange Rate Regime

On July 21st, 2005, the People's Bank of China announced to reform the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. This is a significant step for China during deepening the reform of financial regime and will enormously affect the development of the banking industry. It's important and necessary for all the banks to further understand every policy released during the exchange rate regime reform so that they can take relative measures to reply to the coming opportunities and challenges.This study discusses the impact of the reform of RMB exchange rate regime to the bank's RMB-FX trading business and the possible countermeasures that could be taken. It analyses three aspects of issue — The first, the RMB-FX trading business and its risks. The second, the impact of the reform of RMB exchange rate regime to the bank's RMB-FX trading business. The third, the management of the risks in the RMB-FX trading business.