Research On The Exchange Rate Regimes In Developing Countries

The current currency system gives every country autonomy to choose different exchange rate regime. Right choice of exchange rate regime brings great benefit in realizing its inside and outside equilibrium and can help improve economic development. First, the article introduces the history of the evolution of the exchange rate regime in developing countries, then gives a brief introduction of the economic environment that the developing countries face, changes to that will influence the choice of the exchange rate regimes in developing countries. Developing countries will encounter many difficulties when choosing exchange rate regime, fixed or floating exchange rate both cannot satisfy their need to develop their economy, the article will put forward some reasons why it will be the case. Theories about the choices of exchange rate regimes in developing countries can be found in many articles especially in foreign working paper, the article will tell something about the theories on choosing exchange rate regimes in developing countries, mainly introducing three theories such as original sin, fear of floating, and vanishing intermediate exchange rate regime. Is the exchange rate regime relative to other macroeconomic variables? The article will give an answer to this question, then we make some comparisons of different countries' choices of the exchange rate regime, and make some summarizations. In the end, the article points out some problems in China's current exchange rate regime and gives some suggestions to the reform of China's exchange rate regime.