The Equilibrium Exchange Rate Theory And The Rmb Exchange Rate Policy Research

From the year of 2002, Chinese RMB Yuan have faced up with the heavy pressure of revaluation. According to the traditional finance theory, continuous surplus of current account and sustained increase of foreign exchange reserves will result in the appreciation of Chinese RMB Yuan. Therefore, the question comes out whether Chinese RMB should be revaluated? To answer this question, we should not be only based on the traditional western international finance theory because it is disjointed with Chinese current economic situation and developing stage.Chinese current economic situation includes the following two contents: Firstly, in the process of economic system reform, China economic system has its unique character in the course of restructuring. Secondly, China is at a key stage of economic development that is crucial to exceed the low-level economic growth period and enter a high-level economic growth period. The decision and adjustment of exchange rate will be also influenced by these two factors inevitably. On the one hand, in China, capital account is controlled and is still necessary to be controlled for a period of time in the future. Besides, due to the underdevelopment of Chinese money market, capital market and exchange rate market, it is hard for China to change its fixed change rate to floating exchange rate, which is the system premise we should accept. On the other hand, at the different economic increase stage, exchange rate will play different role in it. We should decide the exchange rate according to the economic increase stage. Therefore, it is necessary to analyze the function of exchange rate in economic growth.Equilibrium exchange rate theory is none the less one of the traditional western international finance theory. It is not suitable to Chinese current situation so that it require modification or even redefinition to be applicable in China.In this article, author analyzes the exchange rate's function in the economic growth strategy. The success of economic growth strategy is closely related with the exchange rate policy. Afterwards, the author redefines the content of internal and external equilibrium, gives it a new meaning and describes the different importance of internal and external equilibrium, which is the start and foundation of the whole analysis.On the basis of above analysis, in this article, the whole social economy is...