Research on the RMB Index from the Perspective of Financial Security

The RMB index was calculated with July 21, 2005, as the base period; the weight of both the broad- and narrow-basket RMB indexes was determined separately; and a functional test was performed. The research indicated that the broad-basket RMB index was more stable and can better reflect the trends of the RMB against a basket of currencies both prior to and as well as in financial crisis. The broad-basket RMB index has better stability compared with the USD index and the Shanghai composite (security) index because the broad-basket RMB index fluctuates less.