The Exchange Rate Theory Of Evolution And Trend Of Research

As a major concern that dominates the theories on international finance, Foreign exchange rate (FOREX) has always been an important part of the international economic system. It traces its way through the history of western economic thought and invariably abounds with the "hot-spots" that override the international economic studies, giving rise to new theories in ever-increasing numbers.FOREX theory involves two aspects. The first is the determination of exchange rates. Drastic fluctuations of exchange rates under the floating exchange rate system have a direct impact on both the interests of microeconomic agents and internal and external equilibriums of the economy. Thus, the determination of exchange rates and factors affecting exchange rates have become the predominant academic pursuits. The other one is the exchange rate system. What synchronizes the decline of the Bretton Woods System has been a growing interest in the comparative study of fixed interest rate system, floating exchange rate system and intermediate exchange rate system, particularly the options facing the developing countries, which appeal powerfully to the international academic community.From the perspective of western economic thought, this dissertation devotes major efforts to probe into the driving forces that have helped to shape the theoretic evolution of the exchange rates and the contexts in which FOREX theories have been developing, as well as the threads of alteration in the course of theoretic development of exchange rates, and provides an insight into theories on the determination of exchange rates and the options of exchange rate system derived wherefrom. In combination with an analysis of the status quo of the direct assets regulation and the free exchange of RMB in the form of assets that is to be achieved, a prospective, in-depth examination is made of the trends in the reform of the current exchange rate system of our country, as well as its options, through an overall examination of the theoretic development of exchange rates and trends of development. Based on an examination of the specific challenges, a personal view has been raised about the possibility of formulating an exchange rate system that is best tailored to the needs of Chinese economic reality.