THE FOG ENCIRCLING THE RENMINBI DEBATE

Yin-Wong Cheung, Menzie Chinn and Eiji Fujii

The Singapore Economic Review (SER), 2007, vol. 52, issue 03, 403-418

Abstract: We assess some recently advanced arguments for the claim that the RMB is undervalued. These arguments are those based on the direct valuation of the RMB, trade imbalances, the accumulation of foreign exchange reserves, and the degree of policy dependence. The extant evidence does not support a strong verdict regarding RMB undervaluation that meets the statistical standards of academic empirical studies. One interpretation is that the evaluation of the equilibrium RMB exchange rate is far more complicated than it appears. Another view is that the data are insufficiently informative. Some related policy concerns are also discussed.

Keywords: Exchange rate uncertainty; trade surplus; international reserves; policy dependence (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1142/S0217590807002750

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