The Study, Based On The Size Of The Supply Point Of View Of Foreign Exchange Reserves

As the most important asset in international reserve system, foreign exchange reserve is the sign of a country's comprehensive economic strength. Since the reform and open-up policy, with the strength of opening policy and rapid development of economic growth, our country keeps the favorable balance of payment in recent ten years consecutively, at the same time, the scale of foreign exchange reserve increased gradually. Up to December 2007, china's foreign exchange reserve hit 1.5 trillion U.S. dollars, and became the largest country of foreign exchange reserve. Many economist and financial expert have done some research and issued many papers on the field of foreign exchange reserve, meanwhile, more and more attention have been paid on the relation of RMB's real effective exchange rate and foreign exchange reserve.However, on the selection of factors which impact the scale of foreign exchange reserve, many papers focus on the demand side and neglect the supply side. So my paper tries to find a new path to select the factors, as my paper divide the foreign exchange reserve to long-term capital flow and short-term capital flow, the factors in my paper include real exchange rate, ratio of RMB's exchange rate misalignment and spread between RMB's interest and other currency's interest. The selection of these factors is full of operation significance, especially in the background of much short-term capital flow to our country since the reform of exchange rate regime in July 2005.Meanwhile this paper calculates and analyzes the real effective exchange rate and the misalignment of RMB's exchange rate. The detail content as following:The first chapter include theoretic summary on domestic and abroad researches, at the same time introduce the research background and method used in the thesis.The second chapter introduces the concept of foreign exchange reserve and the related theories.The third chapter analyzes the china's historical and present situation on foreign exchange reserve and tries to figure out the reasons of rapid increase in recent years.The fourth chapter focuses on the factors which affect the foreign exchange reserve and uses the quantitative method to do empirical analysis, meanwhile calculates and analyzes the real effective exchange rate and the misalignment of RMB's exchange rate.The last chapter summaries the previous conclusion and proposes some suggestion.