Research On Decision And Management Of Exchange Rate Of RMB In The Process Of Internationalization

In 2009 July, China launched a cross-border RMB settlement pilot work, marking the formal start of RMB internationalization. In 2010 June, expand cross-border RMB settlement pilot. From 2011 to 2012, the cross-border renminbi settlement from the region to the project fully liberalized, significantly speeding up the pace of RMB internationalization. In 2014, the cross-border renminbi settlement amount amounts to 7.6 trillion yuan and RMB has become the second largest cross-border payment currency. At the same time, the RMB exchange rate flexibility is strengthened constantly and the convertibility of capital projects is to accelerate. To determine the RMB exchange rate has been in the new environment of internationalization of the RMB: capital flow scale rapid expansion, the offshore renminbi market rapidly expand the scale and influence each other within the territory of the RMB exchange rate, RMB cross-border payments scale is rising, China has become a net exporter of direct investment capital, overseas assets scale is continually expanding etc..In the background of RMB internationalization, RMB exchange rate decision depends not only on the balance of payments, the current account balance and labor productivity, but also on the RMB cross-border payments, the difference between the offshore exchange rate and the onshore exchange rate, the interest rate spread. So, what factors have a decisive influence on the exchange rate of RMB? How much impact? How to better manage the exchange rate of the renminbi, to maintain the RMB exchange rate basically stable at a reasonable and balanced level, and to promote the internationalization of RMB? The monetary policy makers must consider it seriously and try to solve the problem in the new environment.At the same time, China’s merchandise trade volume has been ranked first in the world, and China is the world’s largest foreign exchange reserves and the world’s second largest net creditor country, foreign financial assets and liabilities continues to expand and the scale of foreign exchange exposure is to grow, so the impact of exchange rate on China’s economy will be bigger and bigger. In the process of RMB internationalization, the fluctuation of exchange rate is more frequent, its impact on the macroeconomic will be even more significant. So, it has important practical significance and far-reaching historical significance for research determining and managing the exchange rate of RMB.In this paper, according to the main line of determining and managing the exchange rate of RMB,come to some conclusion. The main conclusion of the study is that the internationalization of the RMB has significant effects on the exchange rate of RMB, different stages should take different floating range strategy etc..This paper includes 6 chapters, the specific contents are as follows:The first chapter elaborated this article’s reaearch background and research goal, the research review, research framework, research methods, possible innovation and deficiency, several related concepts and the research time definition.The second chapter analyzes the impact of RMB internationalization of the RMB on exchange rate. First of all, paper analyzed the changes in the exchange rate of RMB. Secondly, it analyzed the influence of cross-border RMB net payment on domestic foreign exchange market. Finally, it analyzed the characteristic of exchange rate of the dollar, the German Mark, the yen dollar during their period of internationalization, obtains some Enlightenment of the main international monetary exchange rate changes during the period of internationalization.The third chapter has carried on the thorough analysis on RMB nominal exchange rate determinants. According to the RMB nominal exchange rate is determined by the supply and demand of foreign exchange, analyses the main body of market, such as balance of payments, cross-border RMB settlement, foreign exchange assets and liabilities structure adjustment, the central bank intervention etc.. Finally, the real economy and market factors were summarized.The fourth chapter analyses the decision of the RMB nominal exchange rate. Firstly, choose the explanatory variables according to the results of chapter third and choose sample interval according to the research purpose. Secondly, it carry on the empirical analysis through building the multivariate linear regression model on the RMB exchange rate against the U.S. dollar.In addition, it analyses the determination of RMB nominal effective exchange rate.The conclusion is that the RMB exchange rate against the U.S. dollar is decided by the cross-border RMB net pay, inside and outside spread, the yuan dollar forward exchange rate appreciation and that nominal effective exchange rate is decided by the exchange rate of the yuan against the dollar and dollar index.The fifth chapter calculates and analyses the misalignment of the real effective exchange rate of RMB. According to the behavioral equilibrium exchange rate theory, chooses the labor productivity, terms of trade, trade openness, government expenditure as the basic economic variables, and according to the empirical analysis conclusion of the fourth chapter, chooses the offshore renminbi assets scale, inside and outside spread as the basic economic variables, construct the behavioral equilibrium exchange rate model. The results showed, the internationalization of the RMB(renminbi offshore assets scale) have a significant impact on the real exchange rate of RMB.The sixth chapter puts forward the strategies and measures of RMB exchange rate management. It put forwards by expanding the yuan against the dollar exchange rate fluctuation to solve the management goal and operating goal do not match.At different stages of the internationalization of RMB,it should take different management strategy.The possible innovations of this paper:First, according to the nature of the nominal exchange rate is determined by the supply and demand of foreign exchange, analyzes the influencing factors of the inter-bank foreign exchange market supply and demand based on the international balance of payments, dig out the cross-border RMB net pay is an important factor to affect the RMB exchange rate. Using an empirical analysis of the latest data from the 2010 third quarter to the fourth quarter of 2014, calculates the influences on the exchange rate of the cross-border RMB, found the cross-border RMB net pay increase of 1000 hundred million yuan, will make the spot exchange rate against the dollar appreciated 0.58%.Second, according to the actual situation of the RMB offshore market development,put the the offshore renminbi assets scale into RMB equilibrium exchange rate estimation model, and carries on the empirical analysis by the third quarter of 2005 to the fourth quarter of 2014 data. The results show that the offshore renminbi assets scale have a significant impact on the equilibrium real exchange rate of RMB.Offshore renminbi assets scale expands 1%, will lead to real effective exchange rate of RMB appreciate 0.02%.Third, it put forwards that implement different extent of floating management according to the different stage of the RMB internationalization. In the initial stage of RMB internationalization, take the strategy of keeping the RMB exchange rate relatively stable and gradual relaxing floating range. In the advanced stage, should adopt the strategy of free floating.Difficulties are investigated in this paper: how to more accurately differentiate between the transaction demand and arbitrage demand of cross-border RMB net pay,how to find more suitable model for the estimation of RMB equilibrium exchange rate, how to find a more suitable represent variables of RMB exchange rate expectations. I will be take further exploration of related issues.