What is fixed exchange rate policy
Figure 1 shows the RMB-U.S. dollar exchange rate since 2003, with vertical lines indicating changes in China’s policy. One can see that exchange rates were stable during the so-called hard peg from 2003 to 2005; the renminbi gradually appreciated from 2005 to 2008; the currencies were repegged between 2008 and 2010. Trilemma: The impossible trinity, also called the Mundell-Fleming trilemma or simply the trilemma, expresses the limited options available to countries in setting monetary policy. According to Floating Exchange Rate: A floating exchange rate is a regime where the currency price is set by the forex market based on supply and demand compared with other currencies. This is in contrast to a