| Appropriate exchange rate regime has been playing an important role in internal balance and external balance for a country. That is a complicated topic because of the significant and comprehensive role that exchange rate plays in economic performance. With the more and more frequent capital flow, the choice of exchange regimes is a tradeoff between stability and flexibility. Along with the reformation of China's economic system, the exchange rate regime of Chinese currency has experienced the era of planned economy and the Reformation and Opening. In 1994, we successfully carried out the reformation of the exchange rate regime, which played an important role for the continual development of China's economy in the next several years. However, as the enlargement of our opening market and the improvement of the economy marketization, the problems of appreciating RMB take on. In 2005, we revalued the RMB exchange rate, practiced the floating management to exchange rate regime for China, and enhanced efficiently the flexibility of the RMB exchange rate. The whole paper summarizes the theory about how to choose exchange rate regime, studies the development of the regime of RMB exchange rate, and analyzes the mechanism of forming exchange rate of RMB and its defects. The paper takes apart the influence from the exchange rate of RMB which undergoes persistent appreciation in a small range to the macroeconomics by the affect of the exchange rate regime for China, sums up the advantage and the potential risk of the reference to a basket of currencies of the RMB exchange rate. Under the background of the truth of appreciating RMB, we should make the further measure actively to stabilize and optimize the economic environment, decrease the loss because of economic fluctuation at the largest limit. To be aimed at the stability of the RMB regime, the paper gives some advices: stabilizing the anticipation of appreciating RMB in the short run, perfecting the RMB exchange rate regime in the long run. |
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