Research About The RMB Exchange Rate Movements Impact On The Loudi's Import And Export Industry

Exchange rate is price of one currency expressed in another currency. Exchange rate plays a important role in a price system and its fluaction could affect the relative prices of imported and exported commodities thus affecting the country (region) of foreign trade, It has become the essential lever of regulation of a country's trade balance.The equilibrium of the trade balance is the core and basis of the balance of current account and the international balance of payment. In recent years, China's trade surplus has remained relatively large accretion, sustaining the entire international balance of payments surplus and international reserves have grow rapidly, thus bringing the critics of the RMB exchange rate from some countries with trade deficit. The largest Chinese trade surplus comes from the United States, Nearly four years, developed countries led by the United States strongly urge the appreciation of the renminbi in order to eliminate the imbalance between the trade balance. Under the pressure, since the 2005 the RMB began to enter the slow rise stage, the latest data show that in November 2008 RMB real effective exchange rate index is the 113.65%, during that month the real effective exchange rate appreciated 1.33 %, 15.1%appreciation this year, after revaluation China's trade balance and the international balance of payments will be affected ? What kind of coping strategies should be taken? This is the center of this thesis research question. This article is intended to take Loudi as the scope of research, and then discuss it.In this paper, elastic analysis theory is the theoretical basis, mainly to study the relationship between RMB exchange rate and the trade payment, using the single-variable model, plus the monthly data of import and export of Loudi City, on real effective exchange rate of RMB affecting Loudi trade balance, we carry on the empirical study, and on this basis we bring forward the corresponding policy recommendations. First of all, after an overview of exchange rate fluctuations and balance of trade theory, we introduce the ways of the exchange rate affecting the trade balance. Secondly, in order to further analyze the RMB exchange rate fluctuations impact on trade balance of Loudi City, We use the data (from August 2005 to June 2008 )of import and export amount and import/export industry sub-sectors ,we use single-factor model. Empirical results show that: From the point of view of product demand elasticity, limited the Yuan's revaluation will have an impact on exports, but would not have a serious crack down on exports, there exists a rigid demand from abroad, therefore, after the foreign exchange reform, the export volume increased still. Appreciation has a larger impact on the primary products (steel, antimony, zinc, etc.), manufacturing (such as ceramics), it has a negative impact on exports, but the impact on imports is also limited.Finally, we appraise the RMB exchange rate movement's impact on China's trade balance and put forward relevant policy recommendations.