Biweekly Symposium No. 566: The Formation and Policy of China's Exchange Rate System.

Lecturer: YU Yongding

Host: QIN Sidao

Commentators:HUANG Yiping, HE Liping, YANG Fan, XU Jianguo, YU Changhua

Professor YU Yongding spoke on the formation and policy of China's exchange rate system. He clarified the definition, different understanding, and debate over the basic issues concerning exchange rate. he explained that China’s RMB was pegged loosely to USD since its decoupling from it after July 21st, 2005. According to IMF, the RMB was pegged to USD from August 2008 to June 2010 in a form of “stabilizing arrangement” whereas all the developed countries and most of the developing countries have adopted an effective floating exchange rate mechanism. China adopted a mechanism featuring the RMB pegged to a basket of currency index. Professor YU also pointed out that the lately popular opinion that “RMB depreciated because USD appreciated” was misinformed and wrong. He thought whether the RMB should depreciate or appreciate should depend on market pressure, central bank intervention, and foreign exchange reserve. He also introduced three measures to counter the pressure of RMB depreciation, including mobilizing foreign reserves to intervene the forex market, utilizing macroeconomic policies, and adopting capital control. 

This session was moderated by Professor QIN Sidao. Professor HUANG Yiping, Professor HE Weiping, Professor YANG Fan, Professor XU Jianguo, and Professor YU Changhu commented afterwards.