| On the July 21,2005, People's bank of China (PBC) announced that China began to implement the managed floating exchange rat regime with reference to a basket of currencies. The RMB exchange rate was no longer pegged to U.S. dollar. Since then, China's exchange rate regime entered a new stage.Although the PBC subsequently revealed that a basket of currencies was focus on considering the weight of goods and services trade as the basis to select the currency in the basket, the specific currencies and the specific weight were not publicized.Under this background, this paper referred to foreign research results, based on the structure of currency basket announced by PBC, in virtue of weight-inference model to carry through empirical analysis and determine the weights of currencies in the currencies basket, thus analyze the operation of China's new exchange rate mechanism and explain the reasons of the movements of RMB exchange rate. At the same time, this paper introduced a number of integrated factors such as inflation rates, interest rates, China's foreign exchange reserves, trade balance between China and US, and so on, through the empirical analysis to explain the correlation between these integrated factors and RMB exchange rate determination. This paper focused on analysis of the changes of RMB currency basket weight after the outbreak of financial crisis.This study put forward proposals from the policy level to construct a reasonable RMB currency basket; it has a positive meaning in stabilizing the exchange rate. This has an important reference value to the exchange rate adjustment of government and monetary authorities, at the same time can improve the RMB exchange rate mechanism reform, enhance its ability of macroeconomic regulation, thus it has important theoretical and practical significance.The framework of this paper is as follows:Introduction section, this paper focuses on the background of the study, the significance, the subjects, the framework and characteristics of the study, simply introduces the analysis, and shows the basic ideas for this paper.The first section, this paper reviews the history of RMB exchange rate regime. Firstly, it reviews the reform process of RMB exchange rate regime, then analyzes the status of RMB exchange rate regime, and finally analyzes the reason for China selected the exchange rate regime with reference to a basket of currencies as well as the pros and cons.The second section, this paper reviews the research theory and research literature about RMB exchange rate with reference to a basket of currencies in recent years. Firstly it reviews the foreign research on exchange rate with reference to a basket of currencies. Then it reviews the research on RMB exchange rate with reference to a basket of currencies, and sorts out from theoretical and empirical aspects.The third section, this paper introduces the theoretical implications of the exchange rate regime with reference to a basket of currencies and currency weights theory, thus deduces the weight-inference model, and based on the structure of RMB currency basket and introducing inflation rates, interest rates, China's foreign exchange reserves, trade balance between China and US, through the scientific method to estimate the final weight, and thus analyzes the operation of new RMB exchange rate regime.The fourth section, based on the results of empirical analysis, this paper proposes the relevant policy recommendations.The fifth section, this paper summarizes the text, and educes the conclusion. And then analyzes the deficiencies and the further research of this paper.This paper focuses mainly on the third section, the research features is also reflected in this section:this paper introduces the integrated factors such as inflation rates, interest rates, China's foreign exchange reserves, trade balance between China and US, and so on, taking into account the impact of financial market to RMB exchange rate. This paper focuses on analyzing the changes of RMB currency basket after the outbreak of financial crisis, and educes the reasons for the appreciation of RMB.The main conclusion of this paper is as follows:RMB exchange rate regime is a dynamic, progressive process. China's foreign exchange reserves and trade balance between China and US have no significant relationship with RMB exchange rate determination, while inflation rates and interest rates have a negative correlation with RMB exchange rate determination. The RMB appreciation is due to the depreciation of U.S. dollar. |
