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A Reinvestigation of the New RMB Exchange Rate Regime

Lei Tian

Zhongshan University

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

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Date posted: April 9, 2012  

Suggested Citation

Tian, Lei, A Reinvestigation of the New RMB Exchange Rate Regime (April 9, 2012). Available at SSRN: https://ssrn.com/abstract=2037280 or http://dx.doi.org/10.2139/ssrn.2037280

Contact Information

Lei Tian (Contact Author)
Zhongshan University
135 Xin Gang Xi Road
Guangzhou, Guangdong Province
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