Effectiveness Of The Foreign Exchange Intervention In China

Since the fixed exchange rate system collapsed in 1970s, the developed countries sought to the help of the exchange rate intervention to steady their exchange rate system. The studies of this area has been increasing then. Following the Financial Crisis of 2008, the object of the government of China is keeping the economic steady, and try our best to keep the bad impact of the crisis out of China. Because the exchange rate is very import to the national economic, the intervention of the central bank become much import during the crisis. The thesis analyses the effective of the central bank's intervention to the exchange market based on the studies of the former researchers.The whole thesis include five parts:Firstly, it tell us the objective and the motive of this study. And it also introduce the method and the idea in this paper..PartⅡdefine the relative definition about foreign exchange rate intervention firstly. Then introduce the relative theory respectively, such as the objective and the effectiveness of the foreign exchange rate intervention, the channel from which the intervention affect of exchange rate, and the method to test the effectiveness of the intervention, etc,We test the effectiveness of the central bank of China during 1994 to 2008 in PartⅢ.This part also introduce the intervention practice of the central during this term. The result indicate that the intervention of the central bank is effect in total. PartⅣanalysis the problems in the intervention practice. We found the central bank may improve the intervention effect from the following three aspects: the management idea, foreign exchange market, and the financial development of China.Finally, We give some advice according the current situation and the experience of the foreign countries. We believe the central bank may renew the management idea to adapt the situation, improve the foreign exchange intervention system, and enhance the combined intervention as well.The main innovation of this paper is the substitute variable for foreign exchange intervention. And of course it has shortcomings as well, such as the data is too long for the model, etc.