Currently flexible RMB exchange rate mechanism is the best time window

 The nominal exchange rate of RMB against the U.S. dollar appreciated by 21%, the RMB appreciation of the nominal effective exchange rate of 9%; the second phase from July 2008 to April 2010, the RMB against the U.S. dollar nominal exchange rate will remain basically unchanged, the nominal effective exchange rate of RMB appreciation of 5%. In the second phase, due to the deepening U.S. subprime mortgage crisis affected China's export growth, China's central bank foreign exchange market operations by the yuan against the U.S. dollar nominal exchange rate stable at 6.82-6.83 level, so the appreciation of the nominal effective exchange rate of RMB from the dollar against other appreciation of major currencies.
2003 年 to 2005, the international community has witnessed the external pressure for appreciation, many foreign media will be in July 2005 the reform of RMB exchange rate formation mechanism as part of the external pressure the Chinese government .2005 July adjust to June 2008, the nominal exchange rate of RMB against the U.S. dollar rapid appreciation, the external pressure to revalue its currency significantly decreased .2008 July so far, the strength of the external pressure of RMB appreciation has gone through three stages of growth and decline . The first phase in July 2008 to the end of 2009, at this stage, due to both the world economy and China's economy has experienced relatively large adjustment, China's export was also a sustained negative growth, the external pressure to revalue its currency relatively weak. The second stage is the end of 2009 to March 2010, as China's economy achieved 8.7% in 2009, higher growth, and China's export growth from negative to positive, the external pressure for appreciation comeback, especially the U.S. government, business and academia require a significant appreciation of the RMB against the U.S. dollar. The third stage is in April 2010 so far, with the U.S. Treasury to postpone the Chinese Government released the report of manipulating the RMB, and the European sovereign debt crisis intensified, the market's attention from the RMB exchange rate issue into sovereign debt crisis, the external pressure to revalue its currency further weakening the strong.
whether the RMB exchange rate formation mechanism should be flexible to re-present the basic formation of a consensus in China. For example, central bank governor Zhou Ogawa noted that during the two sessions, since the second half of 2008, nominal exchange rate of RMB against the U.S. dollar remained virtually unchanged, the Chinese government made during the global financial crisis expedient, the Chinese government will in the world economy out of crisis then gradually withdraw the policy. However, , on the RMB exchange rate formation mechanism reform timing, path and strategy, there are still large domestic dispute. academic reached a broad consensus is that the RMB exchange rate formation mechanism in the second half of 2010 is expected to re flexible RMB exchange rate will return to the reference to a basket The managed floating exchange rate monetary system. specific to the nominal exchange rate of RMB against the U.S. on the issue of the RMB against the U.S. dollar nominal exchange rate will return to the July 2005 to June 2008 in a small, gradual and controllable appreciation of the path up, but in 2010 the year the nominal exchange rate of RMB appreciation against the U.S. dollar will not exceed 5%.
the recent sovereign credit crisis intensified in Europe, leading to the market place for the differentiation of the expected appreciation of the renminbi. part of the view that the outbreak of the European sovereign credit crisis reduced the RMB exchange rate the need for adjustment mechanism. First, the European sovereign credit crisis will result in decline in developed countries, economic growth, import demand, making Chinese exports facing the deterioration of external demand, which affected China's export growth. If the trade surplus narrowed significantly, then decrease the need for appreciation; Second, on the one hand weak net export growth, on the other macro-control real estate market may also result in fixed asset investment growth rate declined. exports and fixed asset investment growth will make the total fall cooling demand, thus weakening the appreciation of the RMB exchange rate through the inhibition of aggregate demand to the need; Third, the current credit crisis has caused the European sovereign global energy and commodity prices fell, reducing by RMB appreciation China to block the transmission of imported inflation necessity.
However, we happen to believe that the current RMB exchange rate formation mechanism is the best time window flexibility.
First, the adjustment of the RMB exchange rate formation mechanism is best to break the market expectations. If the end of 2009 to March 2010, the market on the growing expectation of RMB appreciation, then with the Greek crisis intensifies, the market attention has been drawn to Europe, the external pressure to revalue its currency significantly alleviated. differentiation in the market situation is expected to occur Under the flexible RMB exchange rate mechanism, the effect can play a surprise, but once the exchange rate mechanism can reduce the flexibility of RMB exchange rate, after facing pressure of appreciation. It is because of the size of China's trade surplus is very low, it is precisely because the Chinese government through the appreciation of the renminbi to curb imported inflation is not a strong motivation, market expectations for the yuan appreciation was significantly lowered, which helps to undermine the flexibility of RMB exchange rate appreciation is expected after the unilateral.
Secondly, the current short-term international capital the size of inflows has slowed down. If the nominal exchange rate of RMB against the U.S. dollar back to July 2005 to June 2008 a small, gradual and controllable appreciation to the track, then the biggest problem with this appreciation of the strategy on the market is easy to form a single side of the expected appreciation in order to attract a lot of hot money inflows. However, there are two of the following reasons, the scale of hot money into the Chinese market decline: First, sovereign credit crisis intensified in Europe makes the decline in risk appetite of international short-term capital to re-influx of U.S. Treasury bonds and other safe harbor; Second, the Chinese government introduced tough austerity measures caused a substantial decline in the real estate market volume, price adjustment phase is about to come. Given the current Chinese stock market is also increasing consolidation, the current speculation on foreign asset prices in China are less attractive. unattractive in asset prices under the premise of the RMB against the U.S. dollar nominal exchange rate appreciation is not sufficient to attract a large number of small short-term international capital flows.
again, external pressure may appreciate the third in 2010 quarter comeback once again. the U.S. Congress will begin in November 2010 mid-term elections, before that, Obama must be the role of the RMB exchange rate issue. This means that the U.S. government's too long. If in the EU, the European Central Bank and the IMF's work assistance, the expansion of the European sovereign credit crisis has been effectively curbed, the attention of the euro zone countries to combat the crisis by the turn stimulate economic growth, then the trade protection from the euro area Doctrine pressure and pressure of RMB appreciation will be re-enhanced. If the United States, Europe and the appreciation of the renminbi issue and then get some emerging market countries (such as Brazil and India) support, so will the Chinese government faces the external environment will be significantly worse, in the RMB exchange rate flexibility Reform also more passive.
soldiers who, to exact, to Clipsal. sovereign credit crisis in Europe is still expanding, the market focus has been transferred, the RMB revaluation pressure to significantly reduce the external background, the RMB exchange rate formation flexible mechanism has been the best time to face the window. taking into account the June 2010 Toronto G20 summit, the United States, Europe and other developed countries, with India, Brazil and other emerging market countries may RMB exchange rate against the group launched an attack on China, the RMB exchange rate mechanism Prior to this flexibility will allow the Chinese government in the G20 summit to have more initiative.