The Multiple Structural Breaks of RMB Exchange Rate After Reform of RMB Exchange Rate in 2005:Evidence from Sequential Testing

This paper applies the latest sequential procedure to select the numbers of breaks in the trend function of RMB exchange rate time series after reform of RMB exchange rate on July 21st,2005,and based on the results of this multiple structural breaks test,we also analyze the detrending data of RMB exchange rate,it is found that RMB exchange rate can be more accurately characterized as a segmented-trend stationary process around four structural breaks as opposed to a stochastic unit root process with breaks.The conclusions have important implications for the study on exchange-rate policy validity,relationship between RMB exchange rate and other variables,as well as exchange rate forecasts.