An Analysis on the Determinants of RMB Exchange Rate
人民币汇率决定因素分析

In this paper, the mechanism of RMB exchange rate determination is studied by using the method of system analysis in the background of China's economics and the characteristics of managed floating rate system. The models of RMB exchange rate determination are skillfully constructed. According to these models, it is concluded that the change in RMB vs. dollar exchange rate will depend on the change in the main currency vs. dollar exchange rates, the relative prices of traded goods, the foreign debt to total income ratios, the money supply as well as on these differential in real interest rates. Empirical results reported in this study suggest that these models can explain the variations of the RMB vs. US. dollar exchange rate at present.