Since July 21, 2005, China has initiated the managed floating exchange ratesystem which is market-based and adjustable to a basket of currencies. The increasingflexibility of formulation mechanism on exchange rate will drive China's foreigncurrencies market to grow, however, it also urges the further improvement on thestructure of the foreign currencies market. While retrospecting the historicaldevelopment of international currencies exchange rate system and RMB exchangerate system, this paper focuses on the inter-bank foreign currencies market formedunder the circumstances in 1994 of exchange rate consolidation, compulsivesettlement of foreign currencies and US dollars-pegged exchange rate system, andmakes the following conclusions: the market itself has limitation in structure, and theoperation of market is also restricted by the system framework. The structuralproblems include small market volume and lack of market deepness and extension,and etc. Meanwhile, the system problems such as the distortion of market demandalso exist. In the end of this paper, the writer tries to forward the relevant suggestionson the new round of exchange rate system reform. |