The Influence Of Interest-rate Parity In RMB Exchange Rate's Decision

The People's Bank of China announced that China would establish managed floating rate of exchange system which referenced a set of currency, on July 21, 2005. The exchange rate of RMB didn't fix on USD only. It would be more flexible. The People's Bank of China adjusted the rate of exchange floating scope basis on economic macro-economy, finance and the foreign exchange market conditions. It means that the reform of RMB exchange rate entered a new stage.The article will study the influence of interest-rate parity in RMB exchange rate's decision when the reform of RMB exchange rate push forward, the capital control relaxes gradually and the market reform of interest rate push forward. The article includes four parts. The first part comments on interest-rate parity synthetically; the second part studies the meaning of interest-rate parity in RMB Exchange Rate's decision; the third part will build up a matrix to analysis the floating scope of RMB exchange rate which can avoid the great quantities international speculation funds flow when China and America are placed in different economy situation; the forth part provide related policy to the RMB exchange rate, capital control and interest rate reform and their coordination.At last, the conclusion of article is that the influence of interest-rate parity in RMB exchange rate's decision will be more and more important.