A Reinvestigation of the New RMB Exchange Rate Regime
April 9, 2012
In order to examine the new RMB exchange rate regime rigorously, we employ the STARTZ model to investigate the behavior of RMB NEER from mid-2006 to mid-2008. We find that a managed float with a target central parity and without an explicit band best describes the daily movement of the exchange rate between RMB and a basket of currencies. We also find some peculiar attributes of the RMB NEER such as small conditional variance and stronger effects of government interventions in foreign exchange market.
Number of Pages in PDF File: 19
Keywords: BBC Rule, RMB NEER, STARTZ model, Target zone, a managed float
JEL Classification: C22, F31, F33
Date posted: April 9, 2012