B[Central Bank: China insists on letting the market play a decisive role in the formation of exchange rates] On October 8, the People's Bank of China's policy stance on the RMB exchange rate stated that China implements a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies. China's exchange rate system has the following characteristics: First, it insists on letting the market play a decisive role in the formation of exchange rates. After years of development, China has gradually formed a multi-level foreign exchange market system with complete functions. The depth and breadth of the foreign exchange market have continued to expand. Business entities independently participate in foreign exchange transactions based on commercial principles. Market supply and demand play a decisive role in the formation of the RMB exchange rate. The People's Bank of China does not set a target level for the exchange rate, does not interfere with the long-term trend of the exchange rate, and maintains exchange rate flexibility and two-way floating. After 2017, the People's Bank of China withdrew from normalized foreign exchange intervention.
The second is to focus on preventing large short-term fluctuations in exchange rates, especially short-term sharp depreciation, from affecting financial stability. In certain situations, such as the outbreak of the epidemic and major external shocks such as the tariff war in April 2025, the People's Bank of China uses macro-prudential management tools for adjustment and forecast guidance, and even directly conducts foreign exchange intervention in extreme scenarios to correct the market's "herding effect" and irrational expectations, especially the self-reinforcement of irrational depreciation expectations, and prevent short-term destructive overshooting of the exchange rate.
The third is to continuously enhance the transparency of exchange rate policy. Since 2016, China has released balance of payments and related foreign exchange data with higher international standards in accordance with the Special Data Disclosure Standards (SDDS) of the International Monetary Fund (IMF), and continues to increase the dimension and frequency of data release. China has actively responded to the initiative of international organizations and will further report foreign exchange-related data to the IMF starting from 2027. B[The euro fell to a 17-month low against the U.S. dollar] On October 5, affected by market concerns caused by France's financial situation and political uncertainty, the euro fell sharply on the 5th, once falling to 1 euro against $1.1161, the lowest level since May 2025. The euro had fallen for four consecutive weeks. The French government bond market has been under significant pressure recently. Data show that last week, the spread between the French 10-year government bond yield and the German government bond yield for the same period once exceeded 150 basis points, the first time since the end of 2011. The market is concerned that French debt levels and a possible political deadlock ahead of next year's French presidential election may increase fiscal risks in the euro zone. At the same time, safe-haven demand and high U.S. Treasury yields supported the dollar. On the 5th, the U.S. dollar index, which measures the exchange rate of the U.S. dollar against six major currencies, rose 0.47% to 102.37. However, weak U.S. employment data reduced market expectations for the Federal Reserve to raise interest rates in the near future, limiting the dollar's gains to a certain extent. B[The Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly issued work guidelines to clarify the rules for the reverse connection of executions in the foreign exchange field] On September 29, the Supreme People's Procuratorate and the State Administration of Foreign Exchange recently jointly issued the "Work Guidelines for the reverse connection of executions in the foreign exchange field" to further improve the working mechanism for the reverse connection between foreign exchange administrative law enforcement and criminal justice, punish illegal and criminal acts in the foreign exchange field in accordance with the law, and maintain the order of the national foreign exchange market and economic and financial security.
The "Guidelines" have 18 articles in total, covering the entire process of reverse connection of executions in the foreign exchange field, focusing on standardizing issues of practical concern such as transfer conditions, jurisdictional connection, evidence transfer and transformation, case handling and feedback, and the establishment of long-term mechanisms.
In terms of transfer conditions, the "Guidelines" clarify that when the People's Procuratorate transfers reverse connection cases to the foreign exchange management department, in principle, it should meet the conditions that the foreign exchange management department has jurisdiction, the person not prosecuted is qualified, there is evidence to prove that the person not prosecuted has committed foreign exchange violations, administrative penalties should be imposed in accordance with relevant laws and regulations on foreign exchange management, the administrative penalty statute of limitations has not expired, and the person not prosecuted has not been administratively punished by the foreign exchange management department for the same illegal act.
In view of the cross-regional, cross-level and other jurisdictional difficulties encountered in previous reverse connection cases, the "Guidelines" clarify the rules for handling jurisdictional disputes, the case transfer procedures, especially the procedural operations on how to determine the jurisdiction of the case.
In terms of the use of evidence, the "Guidelines" stipulate that physical evidence, documentary evidence, audio-visual materials, electronic data and other evidence materials collected in accordance with the law during the handling of criminal cases can be used by the foreign exchange management department as evidence in administrative penalty cases. For verbal evidence collected in accordance with the law during the handling of criminal cases, the foreign exchange management department may comprehensively analyze and determine whether to use it as evidence in combination with other evidence.
The "Guidelines" further improve the case handling methods and result feedback mechanism, stipulating that the foreign exchange management department makes handling decisions in accordance with the law and provide written feedback to the procuratorial organs; it promotes the establishment of a normalized cooperation mechanism between the two parties to strengthen information sharing, consultation and judgment, and business exchanges, and gather joint efforts to deal with illegal activities in the foreign exchange field.
The person in charge of the Administrative Procuratorate of the Supreme People's Procuratorate said that the procuratorial organs will continue to focus on key areas such as illegal trading of foreign exchange, evasion of foreign exchange, and fraudulent purchases of foreign exchange. They will strictly control the "punishability" of non-prosecution cases, promptly propose procuratorial opinions and transfer cases in accordance with the law. The foreign exchange management department shall deal with the matter in a comprehensive and timely manner in accordance with the law, and shall promptly feedback the results to the procuratorial organs. The two sides will inform each other about the transfer and investigation of reverse execution case cases, study and solve problems encountered in the work, and strengthen daily communication. B[CITIC Construction Investment: The AI industry chain is still the main line in the medium term] On September 28, CITIC Securities Research Report believed that the main reason for the shrinkage of A shares last week was trading and seasonal factors, and a restorative rebound is expected after the holiday. The overseas main line has shifted to "reacceleration + reflation + interest rate increase". The U.S. economy has moved from a K-shaped differentiation to a comprehensive recovery, but cost pressures remain. Long-term interest rates have soared, real interest rates have risen, Europe and Japan have followed up with interest rate hikes, and global financial conditions have tightened. The stronger RMB exchange rate provides a certain buffer, but the constraints of tightening external liquidity are difficult to completely lift in the short term. Under the combination of external interest rate disturbances that have not subsided and internal pre-holiday shrinkage that needs to be repaired, it is recommended to maintain a balanced and flexible offensive and defensive configuration. Offensive end: The AI industry chain is still the main line in the mid-term. Once market enthusiasm recovers, the technology sector will often see the most obvious compensatory gains; industrial metals may be suppressed by the interest rate hike cycle, but fundamentals are still supportive, so focus on callback allocation opportunities. Defensive end: It is recommended to use low valuation, high dividends and cash flow certainty as the bottom position. Non-banks have both valuation and performance resilience, and the bank dividend bottom position is still there. In addition, the main line of resource products with hard supply constraints and rising prices is allocated as a hedge against the environment of rising external inflation rates and high valuations that put pressure on growth. B[Shanghai Futures Exchange: Further Expand the Scope of Commodity Futures and Options Trading for Qualified Foreign Investors] With the approval of the China Securities Regulatory Commission, starting from trading on September 28, 2026 (i.e., the opening of trading at 9:00 on that day), the Shanghai Futures Exchange will further expand the scope of tradable products for qualified foreign institutional investors and RMB qualified foreign institutional investors (collectively referred to as qualified foreign investors), and the following commodity futures and options will be newly opened: 1. Alumina, cast aluminum alloy, butadiene rubber, and offset printing paper futures; 2. Alumina, cast aluminum alloy, butadiene rubber, and offset printing paper options.
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