Analysis On RMB Exchange Rate Policy

With continuous depreciation of the US dollar, large financial deficit and increased unemployment rate in the US, economic downturn in Japan and appreciation of the Euro, RMB exchange rate policies become the focus in the world. It is not a simple question due to the important impact on economic development and social security in China.Present policies that already lasted for more than 10 years result in dramatically economic development and promotion in China, which identify that it is suitable for the situation of current China and we should keep it.With the development of economy, freely capital flow is necessary and we should do further improvement on exchange rate system.There should be four stages for reform. Firstly, beginning with the inner and outer environment. Secondly, expanding the floating ranges appropriately. Thirdly, pegging a composite of currencies instead of only the US dollar. The final purpose is to create floating exchange rate system under the macro-control.To sum up, it is necessary to investigate RMB exchange rate policies because it is meaningful to international trade, economic development, reducing unemployment rate, inflation and deflation in China. The final aim of this article is to bring forward thereform process and direction combined with real situation and suggests creating floating exchange rate system.