To the Shanghai Headquarters, Branches, Business Management Departments, and Central Sub-branches in the capital cities of provinces (autonomous regions) and insub-provincial cities；the branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the central government, the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, all Chinese-funded designated foreign exchange banks, and the China Foreign Exchange Trade System:

To further enhance the formation mechanism for RMB market-based exchange rates, the following issues concerning management of the trading rates in the interbank foreign exchange market and the exchange rates posted by banks are hereby notified:

1. The People’s Bank of China (hereafter “the PBC”) authorizes the China Foreign Exchange Trading Center (hereafter “the Center”) to announce to the public, at 9:15 AM of each working day, the mid-rates of the RMB to the USD, EUR, JPY, HKD, GBP, MYR, RUB, AUD, CAD, and NZD for the day, as the mid-rates for interbank spot foreign exchange market transactions (including those on a quoting or matching basis) for that day. The mid-rates, which are announced for that day by the Center, as authorized by the PBC, shall prevail upon such announcement until an announcement of new mid-rates.

2. The formation mechanism of the RMB/USD mid-rate is as follows: the Center makes a price enquiry prior to the opening of the interbank foreign exchange market on a daily basis to the market makers and uses the quotations of the market makers as the sample to calculate the RMB/USD mid-rate, deletes the highest and lowest quotations and obtains the RMB/USD mid-rate for that day based on the weighted average of the remaining quotations; the weightedfunction is determined on a comprehensive basis by the Center according to indicators such as the trading volume and the quotations of the market makers in the interbank foreign exchange market.

3. The Center determines the mid-rates of the RMB to the EUR, HKD, and CAD respectively on a cross-rate basis according to the mid-rate of the RMB to the USD for the day, and the rates of the EUR, HKD, and CAD to the USD in the international foreign exchange market at 9:00 AM. The Center determines the mid-rates of the RMB to the JPY, GBP, AUD, NZD, MYR, and RUBrespectively according to the average quotations of the corresponding currencies made by the market makers for direct dealings prior to the opening of the interbank foreign exchange market on a daily basis.

4. The daily trading rate of the RMB/USD in the spot foreign exchange market may move within a range of plus or minus 2% from the mid-rate of the RMB/USD announced for the day by the Center. The trading rates of the RMB to the EUR, JPY, HKD, GBP, AUD, CAD, and NZD may move within a range of plus or minus 3% from the mid-rate of the RMB to the corresponding currency as announced by the Center.The trading rates of the RMB to the MYR and RUB may move within a range of plus or minus 5% from the mid-rate of the RMB to the corresponding currency as announced by the Center. The ranges the movement of the trading rates of the RMB to other non-USD currencies are separately prescribed.

5. The banks may post to its clients, on an independent basis, the exchange rates of the RMB to various currencies according to market demand and pricing ability; the buying and selling rates for spot exchanges or cash are not subject to any limits, but are subject to independent pricing according to market supply and demand. The banks shall establish and consolidate the internal control system for the posted exchange rates so as to prevent risks and to avoid unfair competition.

6. This Circular shall enter into effect as of the date of issuance. The Circular of the People’s Bank of China on Issues Concerning Management of the Trading Rates in the Interbank Foreign Exchange Market and the Exchange Rates Posted by DesignatedForeign Exchange Banks (YinfaNo. 183 [2005]), the Circular of the People’s Bank of China on Further Improving Management of the Trading Rates in the Interbank Foreign Exchange Market and the Exchange Rates Posted by Designated Foreign Exchange Banks (Yinfa No. 250 [2005]), and the Circular of the People’s Bank of China on Issues Concerning Management of the Trading Rates in the Interbank Foreign Exchange Market and the Exchange Rates Posted by Designated  Foreign Exchange Banks (Yinfa No. 325 [2010])shall be simultaneously abolished. This Circular shall prevail for relevant issues concerning the management of the trading rates in the interbank foreign exchange market and the exchange rates posted by banks referred to in other documents issued by the PBC and the SAFE.

People’s Bank of China

July 1, 2014