Study On Choice Of RMB Exchange Rate Regime

In the open economic environment, exchange rate is the very link 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. Choosing appropriate exchange rate regime has significant impact on the realization of a country's internal-external equilibrium and economic development. The appropriate exchange rate regime varies with the specific circumstances of the country. There is no single exchange rate regime right for all countries or at all times. Choosing of exchange rate regime is a dynamic process.While Chinese economy enters the world economy system more and more deeply, especially after China entering the WTO in 2001, China will inevitably encounter larger challenges. Since the second half year of 2002, the world opinion headed by America and Japan has been setting off a tide of demanding appreciation of RMB. On July 21,2005, China announced to implement the managed floating exchange rate regime which is based on the market and refers to a basket of currencies. However, the issue of RMB exchange rate regime is still the focus of debate among domestic and abroad scholars. And the nucleus of the debate lies in how to choose the optimal exchange rate regime while Chinese economy becomes more and more open. By doing research on the evolution of exchange rate regime, we can find out some valuable experience for the reform of RMB exchange rate regime.Using the recent study achievement home and abroad for reference, this paper studied the determinants in the choice of exchange rate regime from the endogenous point of view. In the mean time, this paper thoroughly analyzed the evolution course of RMB exchange rate regime and studied the future tendency of RMB exchange rate regime by borrowing the successful experience of the transformation of exchange rate regime from Poland. It is also gave some suggestions on deepening the reform of RMB exchange rate regime.After study we can find that:firstly, the selection of exchange rate regime is a dynamic process, and the appropriate exchange rate regime is determined by certain endogenous factors to a great degree. Secondly, the future tendency of RMB exchange rate regime is expanding the elasticity. By constructing the system of the exchange rate target zone, China can realize the marketization of the exchange rate forming mechanism gradually and complete the transition to the floating exchange rate system eventually.