Abstract:

Through an examination of the exchange rate movement in recent ten years and a comparison between nominal effective exchange rate and actual exchange rate, they are shown that the RMB currency is stronger than other major currencies in their trends of exchange rate and its value is not underestimated. China's trade surplus and higher foreign exchange reserves have no necessary connection with RMB's underestimation. Moreover, it is ill founded that the currency deflation in U. S., Japan, etc., is attributable to RMB's lower exchange rate. Consequently, we should not alter the level of RMB exchange rate at random and artificially at present, but should improve our exchange control system and formation mechanisms of RMB exchange rate.

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