A Reinvestigation of the New RMB Exchange Rate Regime
19 Pages Posted: 9 Apr 2012
Date Written: 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.
Keywords: BBC Rule, RMB NEER, STARTZ model, Target zone, a managed float
JEL Classification: C22, F31, F33
Suggested Citation: Suggested Citation