Rmb Appreciation Affect The Chinese A-share Price Of Empirical Research

The foreign exchange market and the securities market are two major sub-markets of financial markets. the exchange rate and stock prices is the prices of the two markets. The exchange rate represents a country's foreign currency prices and the stock price is considered as a weatherglass of national economy. The close relation and the mutual influence between the foreign exchange market and the securities market have an impact on economic stability and development in China. On July 21, in 2005, the People's Bank of China announced that China began to implement the floating exchange rate system with management by taking the market supply and demand as the foundation and referring to a basket currency to carry on the adjustment, the RMB exchange rate to U.S was adjusted to dollars: RMB =1:8.11. In the background of the RMB appreciation, China's stock market has unprecedented bull market prices. So the research on the impact of the appreciation of RMB exchange rate to the share price has theoretical and practical significance, it also has a reference to investors and monetary policy makers. This article, firstly, discusses the background and significance of research on the impact of exchange rate appreciation of the stock to share price, and gives a summary of the current domestic and foreign research results with analyses of the impact on the stock price via the conduction of exchange rate ; Secondly, it discusses the appreciation of RMB exchange rate influence the level of valuation on A share- price, it discusses that international short-term capital and occupation of foreign exchange money supply impact the supply and demand of capital in A-share market; Uses the measurement method of Johansen co-integration test and Granger causality test again to check the influence of the exchange rate appreciation on the nominal exchange rate of the U.S. dollar, eur and Japanese yen and the Chinese A-share stock index , total 739 samples of data, after the exchange rate system reform. Positive results show that there is a long-term stability and co-integration relationship between the stock market of China and the rate of RMB to U.S. dollar and Japanese yen after the reform of exchange rate system, the nominal exchange rate appreciation of the U.S. dollar and Japanese yen exchange is the one-way Granger reasons of the A-share stock index of shanghai. Finally, corresponding strategies are given on stabilizing RMB exchange rate and accelerating a healthy share markets.