Study Of The Effectiveness Of China's Foreign Exchange Market

Efficient market hypothesis (EMH) is the basis of modern financial theory, whose application to foreign exchange market is more and more comprehensive and intensive. On the basis of EMH and the evolvement and status in quo of China foreign exchange market, the efficiency of China foreign exchange market is tested using unit root test. The results provide evidence against the weak form of China foreign exchange market. After that, what blocks the efficiency of China foreign exchange market is analyzed. Based on the application of EMH to the foreign exchange market and microstructure of foreign exchange market theory, the last part of the paper puts forward how to improve the efficiency of China foreign exchange market.