The Study Of Foreign Exchange Intervention In China

After the first reform on exchange rate regime on Jan, 1994, the central bank in China implemented its foreign exchange intervention positively in order to keep the stability of its currency. On July 21, 2005, China performed another reform on exchange rate regime. The government declared the exchange rate system will turn to "managed floating regime being based on the supply and demand of market and consulting a basket of currency", that is exchange rate regime return to managed floating regime, which provides more room and flexibility to the implementation of foreign exchange intervention and also causes a rigorous challenge to how to implement and improve foreign exchange intervention to achieve optimal efficiency.Embarking from the theory frame of foreign exchange intervention, the dissertation reviewed plentiful theoretical and empirical literature in the world to explore theoretical support of foreign exchange intervention and then introduced kinds of popular foreign exchange intervention skills. Secondly, because of the similar economical background as the emerging market countries, this dissertation takes the examples of Taiwan and Thailand's foreign exchange intervention practice to analyze the loss and success of the performance of foreign exchange intervention in these two areas over special periods, based on summarizing the characteristic of foreign exchange intervention in emerging market countries. Thirdly, this dissertation thoroughly analyzes the experience of foreign exchange intervention in China and points out the existed problems, Last, based on previous result, the dissertation discusses the strategies and suggestions to improve foreign exchange intervention.