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Analysis of the Chinese Exchange Rate Stability

Author

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  • Cheng, Youngrok

    (Yonsei University)

Abstract

Asian Financial Crisis now is moving to a relatively stable phase, and at this time, whether Chinese RMB will depreciate is raising the concern of the outside world. If we simply consider economic factors, we will find REER (Real Effective Exchange Rate) increased around 10%, where depreciation factors are lurking. However, after Vice Premier Zhu Rongji took the responsibility of economic operation and fixed the fundamental key of developing stably, many foreign departments present good impetus of development. After that, Foreign Exchange Rate Reservation increases and major focus is put on long-term operation for debt structure. On the contrary, If Chinese RMB depreciates dramatically, there will be some uneasiness towards domestic economy and also the burden of paying debt should be increased, people may suffer the loss quite a lot. Especially even we consider the responsibility as the central country in this region and the political & economical factors causing the harmonious atmosphere of Sino-American relationship, it can be predicted that Chinese RMB cannot depreciate dramatically within 1-2 years.

Suggested Citation

  • Cheng, Youngrok, 1998. "Analysis of the Chinese Exchange Rate Stability," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 2(1), pages 123-155, March.
    • Handle: RePEc:ris:eaerev:0311
    DOI: 10.11644/KIEP.JEAI.1998.2.1.11
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    Cited by:

    1. Ricardo Hausmann & Michael Gavin & Carmen Pagés-Serra & Ernesto H. Stein, 1999. "Financial Turmoil and Choice of Exchange Rate Regime," Research Department Publications 4170, Inter-American Development Bank, Research Department.

    More about this item

    Keywords

    Chinese Exchange Rate; Renminbi Devaluation;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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