Study On Current RMB Exchange Rate System And The Future Movement

Since 2003,China has been undergone a great pressure about RMB exchange rate from developed countries including the United States and Japan. They insist China should let RMB appreciate. Therefore,RMB exchange rate system became the focus both at home and aboard. With China's entrance into WTO,China gradually open its'capital account. Before the exchange rate system change in 2005,China actually exercises the pegging system according to IMF classification. Chinese central bank suddenly change RMB exchange rate to the managed floating rate,in which RMB exchange rate is decided by the relationship of supply and demand,furthermore a basket of currency will be also considered in the process of RMB exchange rate decision. After the new system is enacted,RMB appreciated 2% and adjust the exchange price to US dollar to 1:8.11. This is also the mid-price of next day. We consider this reform uncover the curtain of RMB exchange rate system. Because RMB exchange rate system play a very important role in Chinese economy,choose the appropriate exchange system is our concern. This paper will help us to learn the reform being taken and its'further movement,therefore,is meaningful.This paper will take the abroad research product for reference and make a research on the further movement. Firstly,this paper will make a conclusion and comments on the exchange rate theory,and then review the exchange rate system China has been taking. Base on the exchange rate theory and China's economic status,this paper will give suggestion for the further RMB exchange rate system reform.