On The Orientation Of The Reform Of The Rmb Exchange Rate System

This paper first reviews the theory debates on the choice of exchange-rate regime and analyzes the economic and financial background of china in the process of transition toward market economy, in China. Then the paper advances that in further financial reform and opening-up the fixed RMB exchange-rate regime at the current stage should turn to a more flexible regime.In the analyzing of China's current exchange-rate regime, the paper indicates that the fixed exchange rate pegged to US dollar is firstly contrary to the applied economic condition according to the hypothesis of optimal monetary area. Secondly, fixed exchange-rate regime weakened the central bank's management ability over macro-economy. Thirdly, fixed exchange-rate regime has instability and is vulnerable to speculation attacks. But at present China does not possess the preconditions for floating regime, under which the exchange rate is subject to multiple equilibriums and excessive fluctuations.Through the analysis of the experiences in the reforms on foreign exchange-rate regime in some developing countries and regions, we get some valuable implications for the reform on RMB exchange-rate regime in China. Then the paper gives some suggestions to the reform on RMB exchange-rate regime. The fixed exchange-rate regime connected with US dollar should turn to the target-zone exchange-rate regime in the short and medium term. The ultimate tropism of the choice of exchange-rate regime should be free-floating exchange-rate regime. The paper then comments on the proper time for its implementation and the detail of the target-zone exchange-rate regime free-floating regime. Some coordinative policies and measures are put forward in the end.