Economics, Econometrics and Finance
8 years ago

RMB exchange rate equilibrium model reveals China's currency stability.

Journal of Changsha Aeronautical Vocational and Technical College
RMB Equilibrium Exchange Rate and Exchange Rate Misalignment——Based on Monetary Analysis Model
Zhao Xian-li

Paper Summary

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The article establishes a model to determine the equilibrium exchange rate of the Chinese currency, the RMB. By analyzing factors like money supply, national income, and interest rates, the researchers found that the RMB exchange rate has fluctuated between being overvalued and undervalued over time. However, overall, the RMB exchange rate has not significantly deviated from its equilibrium level. This suggests that China should continue to reform its mechanism for setting the RMB exchange rate autonomously.