Analyze And Forecast Of Long-term Equilibrium Exchange Rate Of RMB

The frequent fluctuation of exchange rate has arise general concern and high recognition of governments, financial institutions, enterprises and academia. With the increasing opening up and high degree of affiliation of China's economy with the world, exchange rate of RMB, the bridge which contract domestic economy with abroad, has become one of the most important focus of attention.This paper first reviews and analyzes the history movements of Nominal exchange rate, real exchange rate and real effective exchange rate of RMB. Based on the cross-sectional data provided by International Comparison Project (ICP) and by using the dynamic purchasing power parity theory, we calculated the relative price level of all countries in the world based on 1993 and 2005 separately, and draw a comparative analysis that the long-term exchange rate of RMB will appreciates.Then the paper reviewed the process of internationalization of the Dollar, Euro and Yen this three major currencies and summarized its impact on the movements of exchange rates. Thus we educe that the internationalization of the RMB will lead the long-term exchange rate of RMB appreciated. Finally, we make a comprehensive analysis of China's international balance of payments situation in recent years, and also draw a same conclusion that the long-term exchange rate of RMB will appreciates.