Rationality Of The Rmb Exchange Rate

Since the reform of RMB exchange rate in 2005, RMB appreciates slightly in a slow way. However, the appreciation of RMB is of little use for relieving the imbalance of BOP, while international floating capital becoming more and more active to bet on the appreciation of RMB. So, it is of great importance to analyses the RMB exchange rate.This paper studies the RMB exchange rate since China's reform and opening to the outside world by analyzing economic indices of IMF, including BOP, foreign exchange reserve, REER, profitability of export enterprises, international competition of export commodities, ability to repay foreign debt. By analyzing these indices, there is a conclusion that RMB is undervalued.There's a similar conclusion that RMB is undervalued by using PPP method and monetarism method.By analyzing the cost and benefit of RMB appreciation, the author considers that RMB should appreciate now, and 6 percent per year of RMB appreciation is preferred.A suggestion to the RMB policy was given under the condition of RMB appreciation in the last chapter of this article.