The Positive Analysis Of The Effect Of NTD Floating Exchange Rate System Towards Taiwan’s Export And Import Total Trade

The positive analysis of the Effect of NTD floating exchange rate system towards Taiwan’s export and import total trade——References to mainland China’s exchange rateExchange rate is a key economic variable for the export and import trade, and the issue of concern by the many governments and economists. Both Taiwan area and china mainland are emerging economies, there are many similarities in the aspect of international trade. On July21th,2005, Chinese government adjusted the existing CNY exchange rate system, and announced the managed floating exchange rate system based on market which refers to a currency basket. But that is a hot topic for theorists if the floating of the exchange rate under floating exchange rate system would impact the total trade amount of China. In this paper, it is studied that the effect of the floating of the exchange rate TWD/USD towards Taiwan’s export and import total trade. The key point of the positive analysis is that in long, medium and short term, what effect the floating exchange rate towards total trade amount.First, it discussed briefly that the theories of the basic classification of the exchange rate system and the effect of exchange rate on the international trade. On that basis, it introduces the transform of the exchange rate system in Taiwan area, especially the implementation of the floating exchange rate system and the influence on the export and import trade. Then, it focuses on the positive analysis of the effect of the floating of TWD REER on the total trade amount. The result indicated that:the appreciation of TWD will not lead to the decrease of the total amount of export in the long and medium term. In the long term, there is no influence on the export of Taiwan area under the floating exchange rate system. However, in the long and medium term, the floating of exchange rate will cause the decrease of the total import amount of Taiwan’s import. Then, it found out the reason of the result brought about the analysis. Finally, it discusses the major policies announced by the Taiwan authorities under floating exchange rate system, including monetary policy, fiscal policy, industry policy, trade policy. According to the situation of China mainland, it lists the several meaningful experiences of Taiwan area.