Research On The Efficiency Of China's Foreign Exchange Market Since The Reform Of RMB Exchange Rate System In 2005

Since July 21,2005, China has adopted the reform of the RMB exchange rate system, putting a more flexible RMB exchange rate formation mechanism into effect. Since then, China's foreign exchange market promotes the reform and development steadily. The People's Bank of China and State Administration of Foreign Exchange have taken a series of policies and measures to deepen the reform, improve the foreign exchange market construction and strengthen the management of foreign exchange market. China's foreign exchange market is showing the tendency of multi-development and higher active level. Since the exchange rate system reform in 2005, with the continuous improvement of foreign exchange rate formation mechanism and the gradually opening up of current account and capital account control, the participants of the China's foreign exchange market has expanded, the trading type and trading mode has become richer, the trading volume has significantly increased. The degree of RMB market mechanism and the foreign exchange market efficiency have significantly improved, which makes the controversy over the degree of China's foreign exchange market efficiency increasingly fierce.This paper bases on improving the reform and development of China's foreign exchange market, to explore the important changes and developments since the exchange rate system reform in 2005, have qualitative and quantitative analysis on the overall efficiency of the foreign exchange market. It also combines series of policy and measure changes which deepen the China's foreign exchange market into a research framework, to study the impact of related policy changes on China's foreign exchange fluctuation and market efficiency. First, on basis of summing up the domestic and international theoretical and empirical research, analyze the efficiency of China's foreign exchange market since 2005, to determine the status of the overall development of China's foreign exchange market. Second, the time span has been up to six years since 2005. In order to avoid the long-term changes in economic structure and the interaction between policy change events which due to the long time span, this paper choose certain foreign exchange policy changes since the exchange rate reform in 2005 as time breaks, analyze the influence of each policy change on the exchange rate fluctuations and foreign exchange market efficiency. Finally, on basis of empirical findings, to objectively evaluate the degree of the efficiency of China's foreign exchange market and the effectiveness of foreign exchange policy changes, and put forward relative recommendations on improving the construction of China's foreign exchange market and increasing market efficiency.