[[alternative]]Will the Renminbi Appreciate Soon? How Much Will It Appreciate?

[[abstract]]Given increasing imbalance of internal and external economic situation, Chinese present exchange rate policy is to improve the Renminbi (RMB) exchange rate mechanism, changing from a de-facto fixed US dollar peg to a new mechanism linking the RMB to a basket of currencies. In addition, a change in the floating bands of the RMB exchange rate should also be expected. In general, the RMB might appreciate by around 7-8% in 2004. However, if the RMB does not fully appreciate by 15-25%, the expectation of RMB appreciation in the market will continue; meanwhile, a slow appreciation will intensify the expectation of RMB appreciation in the future, leading to an increase of hot money and foreign exchange reserves, and further raising the pressure of appreciation. In this case, China will face further increasing imbalance of internal economic situation, and, in particular, serious risks in the financial system.[[fileno]]209_JA01_2004_n2[[department]]當代中國研究中