Re-testing Chinese RMB’s Currency Basket: US dollar pegging vs. currency basket pegging

Abstract

This paper examines China’s current RMB
exchange rate policy by using latest data. The results
illustrate that RMB did not perfectly peg to a basket of
currencies during the period of January to November
2010. US dollar still was the most important candidate
currency to peg. But its weight in RMB’s currency
basket declined. Lastly, this paper provides some
exchange rate policy implication and recommendations
based on empirical findings.