A Study On The Fluctuation Interval Of RMB Exchange Rate

Since2014the RMB exchange rate once appeared relatively substantially devalued due to China economy growth, foreign trade import and export downturn. RMB fluctuations is increasing, one-way RMB appreciation expectations changed, it is a good opportunity to further promote the reform of RMB exchange rate. The central bank has the condition to further relax the amplitude limit, and gradually expand the market role in the form of exchange rate effect. However, China’s economy is still in developing stage, cross-border capital flows lack of effective mechanism of stability, enterprises lack respond to exchange rate risk consciousness, still need through the intervention on the exchange rate to maintain the domestic economy growth and financial stability. How to balance the further increase in the RMB volatility and as far as possible to reduce the RMB interventions to achieve the stability of the exchange rate, and realize the goal of RMB free convertibility, is the main content of this paper.In this paper, through the research of exchange rate intervention and decision theory and the system of the exchange rate target zone, combined with current exchange rate system of the middle price, put forward to the middle price fluctuation intervention interval management model. The model contains the central exchange rate, soft and hard interval, called free fluctuations interval and intervention interval. This paper firstly uses the BEER, selects the long-term and short-term factors of RMB exchange rate, to construct RMB equilibrium exchange rate model, further get the current and long-term equilibrium exchange rate, thus obtained the central exchange rate. Through the evaluation of the historic RMB and RMB middle price, put forward to1%and3%respectively as soft and hard interval boundary. Along with the reform of RMB exchange rate going forward, through the gradual expansion of RMB exchange rate fluctuation and the expansion of the hard and soft interval to expand RMB fluctuation intervention interval. This improves the adaptability of fluctuation of RMB exchange rate intervention interval, also applies to the future RMB exchange rate fluctuation and intervention management.