Abstract:

This paper investigates the fluctuation of the RMB's nominal effective exchange rate (NEER) and the bad impacts on China's economy over the period from 1994 to 1999. The author argues that the policy of the RMB's pegging to dollar makes the NEER undulate heavily in international financial markets. This policy conflicts with the targets of our country's macroeconomic policies. Under a managed float our monetary authority should take account of the level of the RMB's NEER in future.

Key words: RMB, effective exchange rate, exchange rate policy