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This paper explores the current state, significance, and issues of China's foreign exchange market, emphasizing its crucial role in the global financial system. The market has seen substantial growth, with daily trading volumes exceeding 6. 6 trillion by 2023, supporting international trade and investment through a stable RMB exchange rate and ample liquidity. Despite these advancements, several key challenges persist, including information asymmetry, excessive government intervention, and high policy sensitivity. These issues contribute to market volatility and inefficiency. The paper provides a deep analysis of these problems by data on trading volumes and market activities from 2015 to 2023. To address these challenges, the study proposes solutions like enhancing investor education, managing government intervention more appropriately, and improving information transparency. Implementing these strategies can enhance market stability and efficiency, supporting sustainable economic growth and strengthening China's position in the global financial system. Future research is suggested to evaluate the long-term impacts of these strategies and to explore further measures to mitigate ongoing risks and problems in FX market.
Yongquan Li (Tue,) studied this question.