| This paper established RMB effective exchange rate index, which had based on the indices braiding theory. It had selected 17 countries and regions as the sample. The 17 countries'bilateral trade volume had accounted for above eight percent in China's total trade volume. It not only included Europe and the United States and other developed countries, but also including Singapore, Malaysia and other emerging market economies. The weights took into account the country's bilateral trade and the proportion of foreign direct investment. It had adopted the weighted geometric average method, the index base period located in July 2005 to December 2005 monthly average basis of exchange rate, the index base value set at 100. At the base of having established nominal effective exchange rate index, the article also constructed real effective exchange rate indices, which had excluded the impact of price. Consumer price index was selected. Results showed that the two are basically the same trend, also be consistent with indices of the Bank for International Settlements constructed. This indicates indices establishing is ideal. In addition, The paper also studied the effective exchange rate volatility to China's economic impact after the Yuan was constructed, showed that in 2010 there will be upward pressure on the Chinese Yuan, the first rise after falling trend. The appreciation of Yuan in short-term would affect the export little, and effect prices upward. The appreciation would be negative to exports in long-term, and caused the domestic prices downward. It was not right that who considered Yuan depreciation as the cause of the continuous trade surplus. These years RMB appreciation and the proportion of growth of industrial exports of manufactured goods accounted for the whole keep the same pace. There was a negative correlation between the RMB real effective exchange rate and China's foreign exchange reserves, and with no significant relationship between RMB and FDI. |
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