Effective Exchange Rate and International Trade ——Evidence from Zhejiang province

ABSTRACT — In 2005 China began to implement a managed floating exchange rate system on the basis of market supply and demand with reference to a basket of currencies. since 2010, the RMB exchange rate began to appreciate sharply, till now, the pressure of RMB appreciation is still huge, and has great impact on foreign trade. This paper made a empirical reasearch on the impact of effective exchange rate on Zhejiang international trade. We employed the general export model, exports of ordinal trade model, processing export model, results show that the real effective exchange rate of RMB devaluation will not only promote Zhejiang international trade, but also decrease international trade. Keywords-Exchange rate, Foreign trade, real effective exchange rate I