Practical experience suggests that countries in general and developing countries in particular, may not practice what they declare with respect exchange rate regime choice.
Implying the presence of a gap between de facto and de jure exchange rate arrangements. This gives rise to the need for verifying the exchange rate regime declared by a country, which may be exposed to the “fear of floating”. In July 2005 China declared that it was shifting from a dollar peg to a basket peg, but the behaviour of the Chinese exchange rate for most of the period since then resembles a crawling peg more than a basket peg. The objective of this project, led by Imad Moosa, is to identify the Chinese exchange rate regime (or regimes) since July 2005. Casual empiricism suggests that the Chinese authorities have used a crawling peg, a dollar peg and perhaps (more recently) a basket peg with undisclosed components.