The Impacts Of Yen Exchange Rate Movement On Economy And Lessens For The Reform Of RMB Exchange

In recent years,the international community has been very concerned about the RMB exchange rate reform. Since July 21,2005—the RMB exchange rate reform , the RMB appreciation against the dollar has accumulated more than 15 percents,and the appreciation of the trend will continue in the future.The Chinese government and people are facing an important issue,that is how to relieve the pressure from other countries on the revaluation of the RMB and reduce its negative effects on domestic economy and guide the national economy developed healthy and orderly. Based on studying the yen exchange rate movements between 1970's and 1990's (primarily the significant appreciation of the yen),we have lessons for the future reform of the RMB exchange rate.This paper is divided into four major parts. The first part (Introduction) outlined the topics significance,briefly reviewed the relevant literature from the domestic and foreign scholars on the issue,described the structure of this article as well as the research methods and the innovation.PartⅡset "Plaza Agreement" as a cutoff point. The yen exchange rate movements will be divided into two periods and four phases. The four phases are: first,from July 1971 to July 1973,from 360 yen to 264 yen against one dollar,with 36 percent appreciation;Second,from December 1975 to October 1978,from 306 yen to 184 yen against one dollar,the rate of appreciation is 66 percent; Third,from February 1985 to May 1988,from 260 yen to 124 yen against one dollar, the yen's appreciate by 109.7 percent;Forth,from April 1990 to February 1995,from 158 yen to 84.43 yen against one dollar,the appreciation rate as high as 88.1 percent. In this part,we introduced the background of the Japanese Yen exchange rate change,After World War II, Japan's economy developing rapidly, its GNP ranks high in the world, and the international trade surplus (especially the trade surplus with the United States) has expanded year by year, which made the international community forced Japan give up the fixed exchange rate, the Japan yen appreciated significantly. Then,at each stage,we listed the policies and measures the Japanese government used to deal with the yen's appreciation and their effectiveness. Since we believe that the environment of the RMB appreciation is more similar to the environment of the yen after 1985 "Plaza Agreement",so we mainly described the two phases after "Plaza Agreement",which lay the foundation for the below that the RMB exchange rate reform should learn from the experience and lessons.Part III specified the measures that Japan dealing with the appreciation of the Japanese yen and the impacts on the economy,including: impact on export and import;impact on industrial structure and so on. Besides the result of the Macroeconomic policies——bubble economy. Besides, it Comprehend scholars'research at home and abroad to explain Japan's bubble economy and the collapse of the bubble. Finally,we got a conclusion: during the yen's appreciation,it is the government's improper use of policies (including exchange rate policy,monetary policy and fiscal policy,etc.) led to the bubble economy,and in early 1990s',after the economic bubble burst,followed a long period of stagnation.Part IV is the main part of this paper. This section set out the enlightenment of yen exchange rate movements on the RMB exchange rate system reform. This section includes two aspects: First, comparison between the environment of yen's appreciation and recent years'Chinese economic situation. Sum the similarities and differences between China and Japanese. The similarities are: Both countries are faced with enormous trade surplus with the United States and the resulting appreciation of the currency;Both countries implement the export-oriented development strategy;Operation of the financial system are quite similar,such as in both countries,banks dominate in financial system, standing loose monetary policy in a long term; The two countries are all facing the problem of economic overheating in the corresponding period of revaluation of the currency. The differences are: RMB revaluation pressure faced with more complicated international and domestic situation,achievement of the goals of the policy thus will be more difficult. This requires our government in face with the complex situation, make prudent and flexible policies to keep the economy stabile. Second,the lessons of the yen's appreciation on the reform of the RMB exchange rate system Enlightenment: 1. Low inflation,high economic growth rate,will inevitably bring about the long-term appreciation of the domestic currency;2. In the policy goal of choice,to protect domestic monetary policy stressed the autonomy of monetary policy must not be allowed to become a vassal of the exchange rate policy;3. Actively divert excess liquidity;4. Policies should avoid excessively response to changes in economic indicators;5. Unyielding pressure from the outside world,gradually reform the exchange rate;6. The reform of financial institutions,improvement of enterprises'innovation ability will response to environmental changes.