Rmb Exchange Rate Movements Impact On China's Foreign Trade Analysis

China launched reform on its Renminbi exchange rate forming system on July 21,2005, and it had been 3 years when the day of July 21,2008 came, on that day, the exchange rate of RMB against U.S dollar as an example, was 6.8271,shown by foreign exchange rate market, in that case, the appreciation of RMB against U.S. dollar was over 21%. It's not difficult to find out the fact that the exchange rate of RMB against U.S. dollar has maintained its upward trend including two-way volatility sometimes as well since the reformation was made. The date of exchange rate of RMB in the first half year of 2008 explained an faster appreciation, which was nearly 7 percent up over the previous year, 0.1 percent higher than that of 2007. However, due to the impact of the global financial crisis, the speed of appreciation was slowed down. In view of the effect on China's export volume brought by the crisis, a great deal of concern and discussion has been made on the future of the exchange rate of RMB.This paper is divided into three parts:First of all, there is a general introduction of the theory of exchange rate and foreign trade, showing the development of the theory, classical theory as well as a brief introduction of the latest academic theory. Then, it will take an example of Sino-US trade to examine whether there is a significant correlation between currency exchange rates and Sino-US trade volume, using the qualitative and quantitative analysis methods. Finally, it will put forward my own views and make policy recommendations according to the previous analysis, which I hope will show us a way to balance China's RMB exchange rate reformation and the foreign trade.