Alleged Chinese Currency manipulation: the case of Yuan in relation to the USD from 2005 to 2020
|Author:||Bc. Sander Belon|
|Year:||2022 - summer|
|Leaders:|| Ing. Vilém Semerák M.A., Ph.D.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||Currency manipulation has been an increasingly infamous studied topic especially since the US accusation of Chinese currency manipulation in the summer of 2019. Such accusations raise the question as to what extend the Chinese RMB exchange rate might be considered misaligned. This paper seeks
to identify grounds of the accusation of currency manipulation by applying
the Behavioural Equilibrium Exchange Rate Model (BEER) to indicate possible misalignment. Annual data from 1980 to 2019 is employed for which this
paper will emphasize on the period of 2005 to 2019. The utilised Johansen
co-integration test and the Vector Error Correction Model (VECM) suggest a
consistent undervaluation of the RMB exchange rate from 1980 to 2019. Such
undervaluation ranges from -4.623% to -2.016% with a mean undervaluation
from 2005 to 2019 of -2.464%.