Exchange rate regime verification: Has China actually moved from a dollar peg to a basket peg?

Moosa, I, Naughton, A and Li, Q 2009, 'Exchange rate regime verification: Has China actually moved from a dollar peg to a basket peg?', International Economics, vol. 62, no. 1, pp. 41-67.


Document type: Journal Article
Collection: Journal Articles

Title Exchange rate regime verification: Has China actually moved from a dollar peg to a basket peg?
Author(s) Moosa, I
Naughton, A
Li, Q
Year 2009
Journal name International Economics
Volume number 62
Issue number 1
Start page 41
End page 67
Total pages 27
Publisher Camera di Commercio Industria Artigianato e Agricoltura di Genova
Abstract An attempt is made to verify the exchange rate regime that China has been following since 21 July 2005 when a policy shift was implemented, presumably taking China from a dollar peg to a basket peg. The results show that while a regime of simple and strict dollar peg has indeed been abandoned, the evidence does not support the proposition that the current exchange rate regime is a basket peg. It is suggested, based on the empirical results, that the current Chinese regime is some sort of a discretionary crawling peg against the U.S. dollar. It is argued that this regime is consistent with the Chinese objectives of maintaining a competitive advantage while avoiding a trade war with the U.S.
Subject Financial Economics
Keyword(s) China
Exchange Rate Regime Verification
Basket Peg
Crawling Peg
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ISSN 0012-981X
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