Empirical Analysis Of RMB Real Equilibrium Exchange Rate

Since RMB exchange mechanism reform on July 2005,RMB exchange rate greater appreciate. On the Inter-Bank spot exchange market, middle price of dollar against RMB was 7.722 on April 16, 2007, RMB exchange rate greater appreciate 5%. RMB will remain bilateral fluctuation by Market power, reflecting exchange flexibility. At times, new exchange rate forming mechanism must lead to RMB appreciation to some extent, mainly because of highly trade surplus and foreign direct investment (FDI) capital large inflow. Because RMB peg to the US dollar, it makes RMB depreciation relative to world mainly currency, which Promote Chinese commodity Price Competition on the international market and increase in trade frictions between main trade countries, causing RMB appreciation pressure.This paper adopted demonstration research, analyzing basic econometric variables which affect RMB equilibrium exchange rate, discussing RMB Exchange Rate Misalignment froml995 1—2005 4, explaining causes of RMB Exchange Rate Misalignment.Mainly conclusion: openness,trade terms,productivity effect RMB real exchange rate to a larger extent and exist stable equilibrium relationships in long run. RMB exchange rate appreciate to equilibrium level which promote economic growth pattern from extensive growth pattern to intensive growth pattern, from capital dependence to Intellectual Innovate dependence. So improving exchange market,enlarging floating interval of RMB Exchange Rate, enhancing Exchange Rates Policy Flexible,adapting to interest rate liberalization reform, securing RMB freely convertibility,macro-control and market-based exchange rate are feasible choices in the healthy development of our county's exchange rate mechanism.