Research On RMB Exchange Market Pressure: Measuring And Anaylisis

Foreign exchange fluctuation reflects disequilibrium of currency supply and demand,represents the currency appreciation or depreciation pressure.Exchange rate alone can't reflect such pressure under non-floating exchange rate system since center bank also and always do some different degrees of intervention to release the pressure,so the degree of exchange market pressure isn't observable directly.For the policymaker it's necessary to get correct index of pressure.This paper will do such research on measuring RMB exchange market pressure by quantifying every factors that have released market pressure,than we will get the real exchange market pressure represented by exchange rate changing.Note that such changing is different from that under floating exchange rate system.Exchange market pressure is measured in the condition assuming government have not intervened exchange market,whereas the market participators'expectation on government control still remain unchanged.Under this definiton,this paper will focus on constructing model to connect exchange market to several domestic economical factors.Based on the classical IS-LM model,quantify foreign reserve changing of every period as exchange rate changing,exchange market pressure index can be acquired by summing this two factors.This is the general theory of my paper.In chapter 3,this paper does research on the determinant factors that influence RMB exchange market pressure.Based on the index got from chapter 2,this paper analyse the relationship between exchange market pressure and domestic parameters including relative productivity, growth rate of domestic credit and intesest rate.This paper uses SVAR model.In chapter 4,paper analyses the factors that caused increasing RMB exchange market pressure.According to this paper, several factors have caused our internal and external disequilibrium.One is the low domestic consuming level,gap between investmemt and saving is the main reason that have caused China foreign trade surplus.Two,the domestic policy has encouraged foreign investment.Three,Chian has developed under disequilibrium of economical structure that limit domestic consuming level.The other factor is world trading pattern.China internal and external disequilibrium causes long period pressure on exchange market;On another hand,RMB exchange market pressure is released directly by government interfere,which in return intensify such disequilibrium.This is a vicious circle,and has influenced our domestic sustained economic development.One,it's obvious that our real resources have outflowed a lot,in return we get just some paper currency.Two,such developing style has increased our economical fluctuation.In additon,it has way influenced our domestic macroscopic readjustment and control.