On the Chinese Exchange Rate Regime: an Attempt to Flexibility during 2015

This study will demonstrate, through an econometric and asset allocation approach, if and how the Chinese exchange rate regime was changing during 2015. Particularly, China to improve its exchange rate formation system implemented, during July and August 2015, three depreciation as a step toward a market-oriented exchange rate. This situation, along with the new right of the RMB to be an international currency in SDR should generate a loss of weight about the USD in the Chinese basket peg. For this reason, moving from Frankel-Wei’s basic econometric model - but with some appropriate changes - our objective is to verify if the Chinese monetary policy about the exchange rate has affected the inner balance of the Chinese basket-peg leading it towards a flexible exchange rate regime.