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The evolving renminbi regime and implications for Asian currency stability

Guonan Ma and Robert McCauley ()

Journal of the Japanese and International Economies, 2011, vol. 25, issue 1, 23-38

Abstract: The Chinese authorities described the management of the renminbi after its 2005 unpegging from the US dollar as involving a basket of trading partner currencies. Outside analysts have detected few signs of such management. We find that, in the 2Â years from mid-2006 to mid-2008, the renminbi strengthened gradually against trading partners' currencies within a narrow band. In mid-2008, the financial crisis interrupted this experiment and the bilateral renminbi/dollar exchange rate stabilised at 6.8. The 2006-2008 experience suggests that a shared policy of gradual nominal effective appreciation renders East Asian currencies quite stable against one another. Such a shared policy would create favourable conditions for regional monetary cooperation.

Keywords: Exchange; rate; regime; Renminbi; Effective; exchange; rate; Regional; currency; stability; Regional; monetary; cooperation; Asian; currencies; Currency; basket; US; dollar; Euro; Yen; SDR (search for similar items in EconPapers)
Date: 2011
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