Rmb Exchange Rate Determinants Of Equilibrium And Stability

Balance of payments, international reserve and foreign exchange rate are main topics of international financial activities, among which the foreign exchange rate is the fundamental aspect and has attracted more attention. The determination of the foreign exchange rate is a core matter in all foreign exchange rate issues, and still it raises more disputations.Since we carried out reform and opening policy, together with a booming outward economy, the debate about how to price the Renminbi(RMB) has never ceased. In recent year, economic and political factors have brought great changes, under such circumstances, more eyes have focused on RMB exchange rate at home and abroad. Obviously, many of those opinions are far beyond economy itself as many people pointed.In this dissertation, the writer firstly gives a systematic understanding about the determinants of the exchange rate through theoretical analysis, including the classic exchange rate determination theory, the modern and contemporary ones. On that basis, five indexes are summarized and selected. Then the author demonstrates the RMB exchange rate in a historical view with these indexes. Combined with the changing of political and economic ingredients, a forecast on what the RMB exchange rate is going to be has been given. Thirdly, there are a whole analysis and a classification about the equilibrium of the RMB exchange rate. Just as observed, the subjective equilibrium, which is the goal of all currencies in real economic life, often disaccords with the objective one. Undoubtedly, we should keep the RMB exchange rate comparatively stable and make it the rule of our subjective equilibrium. Meanwhile, we should strive to make the RMB exchange rate formed on a market basis eventually, but there is a long way to go.From now to a quite long period thereafter, to ensure the RMB exchange rate to be comparatively stable, the writer makes a brief analysis and gives some suggestions in five directions: economic foundation, policy premise, mechanical qualification, material guarantee and route choice.