A twelve-area model for the equilibrium Chinese Yuan/US dollar nominal exchange rate

► We examine the equilibrium CNY/USD nominal exchange rate using a twelve-area model. ► We account for structural breaks and highlight macroeconomic determinants. ► The equilibrium nominal rate was overvalued from early 1990s until 2003. ► It is strongly undervalued during 2004-2008. ► A three percent sustainable current account leads to larger undervaluation.