The Study Of Project Economic Evaluation Based On The Reform Of CNY's Exchange Rate

Since July 2005, the reform of CNY's exchange rate has brought a dramatic change to the financial market, highlighting with the wider fluctuation range of exchange rate. As a consequence, the exchange rate of RMB to US dollar keeps falling down. In the evaluation of projects, no matter skills with financial instrument or non-financial ones merely give us access to solve problems during the running time of projects, and this paper, from another point of view, will lead decision-maker to make more reasonable choice even before project starting.Based on the Purchasing Power Parity, first of all, the predicting of nominal exchange rate has been studied; this substitute of fixed exchange rate will result in the change in projects' ability of consistency, profitability and liquidation. But to be in accordance to the certain situation of our country, this model rising from PPP theory would be completed with some adjustment.Secondly, by taking place of fixed exchange rate in the whole life period of project, the new method of using fluctuated exchange rate will change the result of evaluation, and additionally, impress decision-maker with some change in NPV and other parameters as well.The other impact exerted by fluctuation of exchange rate on evaluation lies in the Shadow Exchange Rate (SER ) when taking economically analysis. Rooted in the study by scholars backward in elasticity of China's import and export price and equilibrium exchange rate, the new SERF equals to 1.0349 calculated with latest data analysis. All the steps discussed in this paper will bring new vigor and vitality into traditional economical evaluation of projects.In the finality, the adjustment parameter, came form collecting and calculation historical data, is given as 4.34%, while SERF equals to 1.0349.