Exit The Pegged Exchange Rate System And The Practice Of China's Exchange Rate System To Adjust

This paper focuses on the exiting processes from the pegged exchange rate regimes of some developing countries, and summarizes some experiences using for reference. The paper analysis the pegged US dollar exchange rate regime of China, and suggests some proposals on how to exit this system, which include some aspects such as precondition, policy arrangement, exit steps, exit opportunity and so on. After the Asia financial crisis, the rigescent pegged exchange rate has been regarded as one of the reasons that inducing this crisis. Many investigations consider that it is difficult to maintain the pegged exchange rate for a long time, and it is essential to prepare exit arrangement in advance. It has been proved that countries can make a successful transition to a more flexible exchange rate regime without substantial economic disruption. China established the managing floating exchange rate regime after the exchange rate reform in 1994, but recent years the RMB actually pegged US dollar. Since China has been a member of WTO, the external extent of economic will increase, and the pegged exchange rate will not adapt on the development of economics. So presently China should take some steps on exiting this pegged exchange rate regime.The first section of this paper summarizes the experiences of pegged exchange rate in developing countries after Bretton Woods System. Section 2 discusses the theory on exiting mechanism, analysis the exit precondition, policy arrangement, exit steps and so on. Section 3 describes the evolution of exchange rate policies in Chile. The last section focuses on the pegged US dollar exchange rate regime of China, and brings forward some policy proposals on the exit arrangement and the regulation of the present exchange rate regime.