Research On RMB Exchange Rate Market-Oriented Reform Since Exchange-Rate Reform

In 2005, Chinese government reformed the RMB exchange rate system, and implemented a floating exchange rate system with being managed and referencing to a basket of currencies, which basing on both market supply and demand. The degree of marketization of RMB exchange rate has been significantly improved. At the same time, however, the foreign governments considered that the exchange rate of RMB is departure. One of the important reasons is they don’t consider RMB exchange rate is marketized. Chinese government has always intervened the exchange rate market seriously. Since China implemented a floating exchange rate system with being managed and referencing to a basket of currencies, which basing on both market supply and demand, is RMB departure? If so, is it caused by Chinese government’s intervention in the foreign exchange market? If so, how much degree of underestimation does the government’s intervention cause? To solve these problems, this paper research the RMB equilibrium exchange rate and central bank intervention.The arrangement of the content is that based on the elaboration of the process of RMB exchange rate’s Marketization, this paper measures the RMB equilibrium exchange rate, and point out the degree of RMB exchange rate marketization. Taking the intervention by the central bank has a nonnegligible impact on the exchange rate marketization all the time into consideration, this paper introduce the intervention by the central bank to research the issue of exchange rate marketization, and then raise policy suggestions. This paper find that our country is in the process of RMB exchange rate marketization, and RMB exchange rate is gradually approaching to the equilibrium exchange rate. The degree of RMB exchange rate marketization is promoting. The intervention by the central bank has some role in the foreign exchange market, but the degree of RMB exchange rate misalignment caused by the intervention by the central bank is so small. It indicates that the purpose of the intervention by Chinese central bank is avoid sharp fluctuations in the exchange rate. The intervention by the central bank doesn’t cause seriously departure of RMB exchange rate.