Rationality Of The Rmb Exchange Rate

Since foreign exchange rate plays a important role in an open economy system, which is closely related to the economic development; further more, after so many years' fluctuation, China is striding to a rational stage with achieving a new top in economy, the empirical study of the exchange rate of the Chinese currency (RMB) is vital.In accordance with the facts of China, the author study the exchange rate of RMB in 1987-2001 by the PPP theory, analyze the six basic economic elements, such as the international payments, the foreign exchange reserves, the real effective exchange rate, and so on.As a conclusion, the exchange rate of RMB is revalued from 1987 to 1990;since 1990, especially in 1994, the exchange rate of RMB is devalued; as the result of the practicing of the irrational system of exchange rate, such phenomenon exists till now.