The Measurement And The Impact Study Of Rmb Real Effective Exchange Rate

As one of the most important indicators in measuring the competitiveness of a country's currency in international trade and the financial field,the Real Effective Exchange Rate(REER) plays an more and more significant role in international financial system with diversified currencies.Measuring and analysis on REER can not only help us to grasp the RMB's real tend towards in the international market,but also can understanding of its impact on China's macroeconomic variables.It has great theoretical guiding significance in assisting Chinese government to develop relevant economic policies.By scientific selecting 12 samples countries and area and reasonable setting up theirs' trade weights,this paper focuses on the measurement of RMB REER in 2008 by the arithmetic and geometric weighted average methods basing on the arithmetic average of monthly data from Aug to Dec 2005.This paper can offer some valuable reference for the central bank of China.Basis on the measurement results,this paper empirical analyses the impact on macroeconomic variables of RMB REER.Firstly,by regression analysis between RMB REER and China's trade surplus,it proves that though RMB REER has impact on trade surplus,it is not the only influencing factors.Therefore,to improve China's trade surplus should hang on all the influencing factors' whole action instead of only considering RMB appreciation. Secondly,by Granger causality test on RMB REER and trade structures,it shows that the changes of RMB REER is the Granger cause of China's trade structures under 95%confidence level,while China's trade structures is not the Granger cause of RMB REER.To some extent it can say that the changes of RMB REER,which has leading roles in adjusting China's trade structures,can be the best information in forecasting China's trade structures adjustment.Lastly,this paper analyses the relevance between RMB REER and China's foreign exchange reserves before and after China's exchange rate system reform.The significant change in correlation coefficients under different exchange rate systems tells that the more flexible the exchange rate system is,the less impact the foreign exchange reserves has.Based on the above empirical analysis results,this paper offers three policy recommendations as follows:first,the central bank should regularly measure and public RMB REER,and target the exchange rate policy on stable PEER in the short term.Second,perfect the managed floating exchange rate system,expand the floating range of RMB exchange rate and enhance the flexibility of foreign exchange market.Third,adjust the industrial structures to realize the optimization and upgrade of trade structures.