| With the development of economic globalization, the exchange rate plays a moreimportant role in the country’s coordination of internal and external balance. Underthe current international exchange rate system, the monetary authority intervene in theforeign exchange market by taking a series of policies and instruments, making theexchange rate to float as the policy objectives need. In the case of our country, sincethe exchange rate regime merged in1994, the RMB starts to appreciate, especiallyafter the reform of exchange rate in2005, the RMB accelerate the process ofappreciation. With the continuous development of RMB’s internationalization, and theincreased openness of capital account, cross-border capital flows more frequently,which require the high effectiveness of central bank’s intervention in foreignexchange markets. However, there in no any official data showing the central bank’sintervention intensity and efficiency, so we don’t get to know the appreciate pressureof RMB in the process of internationalization.The foreign exchange market pressure index (EMP) is used to measure the excessdemand of one currency in the market, which can be measured by a stated model. Bydoing these, we can estimate the appreciation pressure of one currency facing. Thisarticle measures RMB exchange market pressure between1996and2011by taking theexiting model. Through this empirical study, we can conclude that RMB facesincreasing appreciation pressure in the process of capital account’s openness. At thesame time, the government intervention intensity is continued strong.. On this basis,we further study the intervention efficiency of the central bank, and get the conclusionthat the central bank’s sterilized intervention could adjust the RMB exchange rate inthe short term and resolve large-scale cross-border capital’s liquidity shock, but theintervention can’t change appreciation trend of RMB. Considering these, this articlealso put forward to a series of rational recommendations. |
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