The Study, Based On The Combination Of The Rmb Exchange Rate Forecast Predicts

The forecasting of exchange rate has been a hot issue for long. During 1990s, the dual exchange rate system was adopted, with official exchange rate applied to non trade transaction on one hand and internal settlement rate applied to all trade transactions on the other hand. The international trading increased rapidly owing to the Reform and Open policies and undervalued exchange rate further contributed to the increase of China's export and the expansion of surplus on current accounts and international reserves. Started on July 21 2005, when the People's Bank of China announced a revaluation of the currency and a reform of the exchange rate regime. The objective of the reform is to enable the market to fully play its role in resource allocation as well as to put in place and further strengthen the managed floating exchange rate regime based on market supply and demand. In 2010, shocked by worldwide financial crisis, China's economic is rebounding at a strong trend, with export giving a boost to market. There is a series of measures taken to exchange rate reforms, which leads to the bigger fluctuation extent of exchange rate. This indicates the exchange rate risk will proceed. Considered US dollars as the most important currency in a basket, it is meaningful to analyze and forecast the trend of RMB to US dollars. In this thesis, we use combination equations, ARIMA Model and GARCH Model to build the forecasting models and do analysis on trends.There are five parts in this thesis. The first part is about the summary and retrospect of exchange rate determining theory, which is followed by the second part–three simple exchange rate forecasting models that could be specified as Simultaneous Equations Model, ARIMA Model and GARCH Model and according empirical results. The third part introduces the basics of combined forecasting model and the method constructed by five different models. Accordingly, the fourth part is the empirical results of combined forecasting models including the testing and forecasting of different weighted combined models and build up the forecasting-effect system based on forecasting error indexes. The final part is to forecast the exchange rate trend on RMB with respect to US Dollars based on these models. It is concluded that RMB with respect to US Dollars could give a rise by 5%. We should have a positive attitude and responding policies.