Rmb Exchange Rate And The Current Exchange Rate System Reform Ideas Research

Since the reform of RMB exchange rate system in July 21, 2005, RMB adhere to a sustained, gradual and steady appreciation. In 2008, the pace of appreciation go faster, coupled with the increasingly complex international and domestic situation, a lot of doubt in the voice, then what is the reason for the continued appreciation of RMB? Is it more advantages than disadvantages or more harm than good in china and in the world? What are the shortcomings of Chinese current implementation of a Managed Floating Exchange Rate System, is it still the dollar peg system? How to improve the shortcomings of the system arising from the appreciation? The answers to these questions are the content of the article.The background is the sustained and steady appreciation of RMB since the reform in 2005, from a series of problems triggered by the appreciation, the article analyze the essence and the real flaws of Chinese current exchange-rate system. On the basis of Purchasing Power Parity theory and Interest Rate Parity theory, the analysis of the reasons for the continued appreciation of RMB exchange rate against U.S dollar, from economic growth, the international balance of payments, foreign exchange reserves, money supply, inflation, the different interest rate between China and foreign countries, the central bank intervention, the expectation of the market, and other internal and external reasons respectively, pointing out that revaluation is necessary, the core issue of the concern should be the way of the appreciation. About the impact of the appreciation of RMB, the analysis coming from the impact of both internal and external aspects, by combining theory and reality then come to the conclution that the impact of appreciation to China and the world is in terms of the coexistence of all the pros and cons. The government should proceed to resolve the issue from the system, the focus is how to standardize the exchange rate system, how to eliminate the strong appreciated expectation of the market at present. Finally, the article give the suggestions to make perfect the Managed Floating Exchange Rate System by expanding the floating range, the gradual opening of the capital projects, and cultivating a sound foreign exchange market, then point out that as the RMB exchange rate system reform goes into deep direction, with the gradual improvement of the corresponding measures and Chinese healthy economic development, it is foreseeable to achieve our hope of completely open capital account and RMB Free-Floating Exchange Rate System with market-oriented exchange rate eventually.