Reform Of The Rmb Exchange Rate System, The Equilibrium Exchange Rate And Macroeconomic

The system of the exchange rate had been changed monstrously since the Reformation and Opening in China. Generally speaking, these changes were much successful. They had contributed a lot to the proceedings of the Reformation and Opening and the entering of world econometric system. Furthermore, the developments of the Chinese economy and trade were helped by these changes. Then China was ranked as one of the great powers in the world. But there are still some blemishes existing in the formation mechanism of RMB exchange rate, such as the distortion in formation mechanism of RMB exchange rate, the lack of flexibility, the deficiency of no canonical scale provided for the adjustment, high cost to maintain the rate, the increment of society trade transaction cost and so on.The out of balance in the RMB exchange rate was mainly discussed in this paper. At first the RMB exchange rate formation mechanism was explicate. On the background of the existing system, micro behavior basis of the exchange subjects was normative analysis. Then the demand-supply functions in the foreign exchange market were established. And the functions acted as the basic that make the rate balance. And the balance is the stable point arrived purely by the market, which is the cross point of the demand-supply functions. By analysis, we can see that it is frequent and inevitable that foreign exchange daily fluctuation bring about unbalance, as the restrict limitation. National Central Bank passively intervention market. But difficulties in operation make exchange rate level instable over a long period of time. Therefore, if we want that exchange rate can run to balance automatically, it is consequential to extend the floating range. However, no matter which system has been chosen while transferring toward the floating rate of...