During the first eight months of this year，the RMB exchange rate fluctuated in both directions before experiencing a depreciation. Though the US Dollar Index (USDX) seesawed lower，the RMB continued to depreciate significantly against the USD. The primary cause of the current devaluation of the RMB is the slowdown of domestic economic restoration，while the ongoing monetary tightening cycle of the Federal Reserve (Fed) is also contributing to the RMB’s depreciation. In addition，the regulator has demonstrated a high tolerance for exchange rate depreciation，allowing for greater flexibility in monetary policy regulation. Since entering the second half of the year，the planned policies aim to stimulate economic growth，which is expected to stabilize the RMB exchange rate. As the Fed nears the end of its rate hike，external factors will exert less pressure on the RMB exchange rate. Additionally，the regulator has various exchange rate management tools to ensure the smooth market functioning. It is expected that the RMB exchange rate will maintain a stable two-way fluctuation pattern.

Review of the RMB Exchange Rate Dynamics in the First Eight Months of 2023

In 2023，the RMB exchange rate fluctuated in both directions and then depreciated. By the end of August，the RMB depreciated 4.65% against the US dollar from the end of the previous year，while the USDX raised 0.13% over the same period. Upon reflection on the initial eight months，the RMB exchange rate has gone through three major stages.

The first stage: from the beginning of 2023 to early May，the RMB exchange rate fluctuated in both directions. This stage can be subdivided into two sub-phases. The first sub-phase is from the beginning of 2023 to mid-March，when the USDX experienced sharp fluctuations，and the USDX and USD/CNY trends were closely aligned. During the second sub-phase，which lasted from late March to early May，the USDX seesawed lower，while the RMB experienced a slight depreciation.