On The Reform Of RMB Exchange Rate Regime

July 1st in 2005, the vision of the whole world hurl to China, hurl to RMB rate of exchange. On Peking time 7:00 P.M.,the People's Bank of China , with authorization of the State Council, makes the following announcements regarding reforming the RMB exchange rate regime: Starting from July 21, 2005, China will reform the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies.This is the most important variety since 1994 in the rate of exchange system reform.From now on RMB will no longer be pegged to the US dollar and the RMB exchange rate regime will be improved with greater flexibility.How to comprehend the activity? What infection will the RMB exchange rate reform produce on the development of economy and social live of China? The text goes deep in to analyze the background,elaborates the principle of a basket of currencies mechanism and answer the question above.There are five part of the paper. The first part emphasizes analyzing the background of the announcements, points out that the outer pressures are from the U.S..EU and Japan.The main reason are for weakening the competition of the Chinese commedity, keeping the FDI from continuing large-scale flowing into China and pleading for the downturn of their economics. Among them, Japan is for keeping its predominant position in Asian economic,increasing the importance of yen in the future"Asian Yen".The U.S.is mainly for balencing the international trade deficit,abating the burden of foreign debt.The EU emphasizes particularly on international trade,for keeping China commodity...