The Process of RMB Exchange Rate Controversy and Fundamental Analysis of Appreciation Pressure

This article is intended for analyzing the three evolutionary stages of the RMB exchange rate appreciation pressures, and discussing the source of the RMB appreciation pressure integrated with in three types of economic fundamentals, such as China’s trade balance, domestic and foreign interest rate differentials and China’s inflation situation. Through analysis outcome, the RMB exchange rate was not substantially under-valu-ed; on the other hand, it may be even over-valued. As a result, one-off revaluation is not necessary. RMB appreciation pressure is mainly due to external pressure from the US and other countries. Therefore, China must recognize the essence of appreciation pressure, adhere to the path of reform of autonomous control of the RMB exchange rate, and can implement counter-measures if necessary.