Research On The Foreign Direct Investment By The Fluctuation Of RMB Exchange Rate

Foreign direct investment has become the important means in the process of internationalization by the multinational corporations through the waves of mergers and acquisitions. As one of the core regions, using foreign investment has always been an important matter in the Yangtze River Delta region as one of the first regions attracting foreign investment. Since Reform and opening up, the scale of foreign direct investment in the Yangtze River Delta has taken important changes, the quality and utilization of foreign capital raising a new level, foreign investment structure continuing to improve. Since July2005, the appreciation of RMB, the adjustment of RMB exchange rate mechanism and the frequent exchange rate fluctuations resulting a significant impact in the Yangtze River Delta and even the whole country.In this context, foreign investment will balance benefits and risks. In order to reduce the uncertainty of the appreciation of the RMB exchange rate and the rapid uplift of the case the cost of production brought about by the inflation, investment direction will turn to the low-cost and short areas of high return on investment of foreign capital. Therefore, to research foreign direct investment in the Yangtze River Delta, it is essential to consider the revaluation of the RMB exchange rate movements.Based on those above, this article discussed the effects of the RMB exchange rate fluctuations on foreign direct investment in Yangtze River Delta region. Firstly, this paper combs the foreign direct investment in the development process of Yangtze River Delta area, especially from the reform of exchange rate. With a comparative analysis of horizontal and vertical angles, this paper analyzes the status of foreign direct investment of the Yangtze River Delta region, and use empirical analysis method to analyze the impact of foreign direct investment in Yangtze River Delta, multi-dimensional analyzing the currency exchange rate fluctuations since the reform of foreign direct investment in endurance characteristics of the facts, combined with exchange rate movements and exchange rate fluctuations on the impact of foreign direct investment, we has established co-integration regression equation, empirical analyzed the effects of RMB exchange rate movements on foreign direct investment. Finally, according to research findings, we gives some policy proposals to promote foreign direct investment and to guide the rational flow of foreign capital in Yangtze River Delta to improve the quality of foreign capital structure optimization and realization of foreign investment by promoting the region’s economy sustained.Through empirical analysis, this paper gives the following conclusion:labor costs not only has the long-term impact, but also has short-term impact effect on foreign direct investment; RMB real effective exchange rate only has long-term effects on foreign direct investment, while the short-term impact is not significant, this may be because the real exchange rate movements on the inhibitory effect of foreign investment requires a transduction process, the negative impact may not be fully apparent in the short term.