Analysis The Validity Of Exchange Rate System And The Trend Of RMB Exchange Rate After "Reform"

In the open economy, Exchange Rate which is regard as the core economicvariable, regulates and links with various macro and micro economicfactors, also influences the balance of countries' economy both domesticand oversea. The investigation of the efficiency in the exchange marketand the basic characteristics of fluctuation in exchange are the core andessence issues in the study of exchange market. With the opening ofexchange market and the gradually release of the control, the traditionaltheories are not comprehensive to interpret the movement and thefluctuation characters of modern exchange rate. People begin to study thecurrency as a kind of special financial assets, and fuse many core methodsof capital market into models of exchange market. The study of Efficiencyof Foreign Exchange Market, to which the Efficient Market Hypothesis givespriority, was dominated by linearity model all along. With lucubrating,people realize that dynamic non-linearity model, which is representativeby Fractal Market Hypothesis can reflect the objective reality of foreignexchange market either. Foreign demonstration investigations havealready fully proved its superiority and creditability. After the reformof the RMB exchange rate, the RMB Exchange Rate Forming System was changedradically. We can foresee that, along with the coming of a series ofreforms and related policies, commercial banks will be endowed with moremarket participated opportunities and managerial autonomy.In the article, author uses the FHM model and concept of "RelativeEfficiency" to fractal analyze the RMB Exchange Rate Forming Systembefore and after "Reform" and draw the conclusion that the RelativeEfficiency of the China Foreign Exchange Market is still inferior throughtransverse compared. Author also dopes out the RMB exchange rate throughrelative study about RMB exchange rate, US dollar index and RMB NDF market,meanwhile, raise the proposal on how to perfect the China foreign exchangemarket and how to make the RMB to be completely convertibility currency.