Research On The Effects Of Central Bank Intervention To RMB Equilibrium Exchange Rate:1994-2013

Exchange rate as the macroeconomic variables in our economic life, is becomingincreasingly important in the integration process of the global economy and financial.Since the late of1980s international monetary and financial crisis are frequentoccurrence, its impact on economic show the importance of the exchange rate systemand exchange rate policies. China as the economy steady development country, thedevelopment of the RMB exchange rate trend has been the object get a lot of attention.Currently, the major Western countries questioned the RMB exchange rate wasseriously undervalue, questions about whether appreciate the RMB exchange rate hasbecome the most pressing issues for China in the global economic and financialactivities. The correct solution of the RMB exchange rate issue has also become apriority. The international community remains questioned the RMB exchange ratepolicy, although PBOC made it clear that the purpose of the exchange rate policy is tokeep the RMB exchange rate basically stable at an adaptive and equilibrium level. Inthis regard, this paper based on the market context of RMB exchange rate formationmechanism, from the heterogeneity of the foreign exchange market tradersmicroscopic hypotheses, theoretical Study the existed affect of the exchange ratemisalignment degree at central bank intervention.This paper selects the1994-2013monthly datas as the research sample,introduction the theory of the RMB exchange rate determination, find the suitabletheoretical to build RMB equilibrium exchange rate regression models, estimates theRMB exchange rate misalignment based on the regression result and H-P filteringmethod. Then measure the coefficient of central bank intervention in accordance withthe relevant formulas. Establish the appropriate smooth transition autoregressivemodel combination of both for empirical research. Analysis the types of impulseresponse function, and concluded that the effects of different ranges of central bankintervention on the RMB exchange rate equilibrium are different.Studies show the positive effect of the central bank’s intervention in the RMBequilibrium exchange rate in large numbers time. On this basis, this paper from theexchange rate formation mechanism, foreign exchange market reforms, nationalsupervision and intervention three angles proposed corresponding policyrecommendations. This study enriches the theory of central bank intervention, help to correct understanding and awareness the effects and the role of central bank intervenein the RMB equilibrium exchange rate achieve process. Provide reference for thereform of exchange rate policy and exchange rate regime.