The Evolution And Reform Path Of The Exchange Rate Regimes In Emerging Markets

Exchange rate is the interlinkage that connects economy and trades of one country to those of others. Exchange rate regime is an important component of a country's economic system. The economic variables influence the choice of exchange rate regime, which has an effect on the fluctuation of the exchange rate. Proper exchange rate system is one of the guarantees of one country's economic growth. Compared with the developed countries and other developing countries, the emerging countries are more easily impacted by the unsteady market under the condition of economic and financial globalization. Since the year of 2003, RMB has faced up a huge pressure of appreciation from some western developed countries. On July 2005, Chinese government claimed that China would carry out the managed floating exchange rate regime on the basis of the market and referring to a basket of monetary. However, the problem of RMB exchange rate regime is still one of the focuses argued by scholars. By doing research on the evolution and reform path in the emerging market countries on the basis of the endogenesis, we can carefully find out some useful experience and lessons for China's exchange rate regime reform proposals.After using the academic achievement home and abroad for reference, this dissertation studied the exchange rate regime in the view of endogenesis, under the analytical framework of cost-benefit theory. The author verified the economic variables that influence the choice of exchange rate regime by the method of econometric models and reviewed the evolution of exchange rate regimes in some emerging market countries. In the mean time, this dissertation analyzed the economic background before and after the Chinese government deciding to reform the RMB exchange rate regime. It also gave some suggestions on the policies that would coordinate with the new exchange rate regime.By doing the research, the author deems that the choice of exchange rate regime is a dynamic process and would be different in different stage. The optimum exchange rate is decided by the endogenesis. The policy makers would consider whether to switch the exchange rate regime, choose what kind of regime and when to change it according to the economic environment. Different emerging market countries would face different economic variables, but they would also show some commonness. As a result, their exchange rate regimes would show diversification while would also show commonness. The trend for the choice of exchange rate regime in these countries is to extend the "Mundell Impossible Trinity" and choose more flexible intermediate regimes before possessing the conditions to adopt floating regime. The reform of RMB exchange rate regime is the action of internal and external pressure. Instead of getting the reform done for ever, the government should improve the reform and adopt the proper policies that would coordinate with the new exchange rate regime in order to develop the economy steadily while achieving the internal and external equilibrium.