Fluctuations Of Exchange Rate Impact On Inflation In China

The economy of China constantly blending into the world economy since Chinese opening and reforming policy in1980s.In the context of economic globalization and the integration of the world economy, RMB exchange rate is a very important economic variable in china and the world economy. After July21,2005exchange rate reform, the RMB exchange rate is no longer pegged to a single dollar but transform to a more flexible exchange rate mechanism. After the exchange rate reform, the relative high inflation becomes the focus of attention. Generally speaking, after the "7·21" exchange rate reform, the appreciation of the RMB exchange rate accompanied by high inflation. Then, in the condition of our country, if the appreciation of the RMB exchange rate can control inflation?In this paper, Firstly, study on the relationship between the exchange of US dollar and the inflation in the United States. Secondly, study on the relationship between the RMB exchange rate and our country’s inflation. Finally, through the comparison of the results, we try to find out the cause of the gap and try to give policy recommendations.In the process of the analysis, we not only use the qualitative and quantitative analysis but also add some chart analysis. Before we use the regression model, the data of every variable have been tested at first in order to make sure that the conclusion getting from the model are of practical significance. The study show that the appreciation of the currency control the inflation under floating rate regime appears more obvious than what under fixed exchange rate system, and the government should reduce intervention and consider liberalization and marketization of exchange rate of RMB.