Is It Necessary To Appreciate In The Process Of The Internationalization Of RMB?

As China’s economy developed quickly and stably in recent years, RMB has matched some conditions to be internationalized. China has also made some useful attempts to achieve the regionalization and internationalization of the RMB. The benefits of the internationalization of the RMB are obvious, but it also brings the problem of the exchange rate appreciation. Therefore, we need to discuss such a question:is it necessary for RMB to appreciate in the process of internationalization? How much is the Reasonable level?This paper first analyzes the process of internationalization of the yen and the German mark as well as their exchange rates’ fluctuations in that period. Both of these two currencies appreciate substantially in the internationalization process. The German mark succeeds in internationalization with a steady increase in its exchange rate, and yen failed because of its volatile exchange rate. Then this paper turned to the specific problem of the internationalization of the RMB. We first analyzed the significant events of the internationalization of the RMB, then focus on the exchange rate issue. This article will use the portfolio balance model and Johanson cointegration test to answer the question above. The results show that the Chinese and foreign currency assets does not replace each other completely. One cointegration relationship is found among s, d, f, i and i*. And we can establish a standardized cointegration equation. Vector error correction model reflects the return from short-term to long-term balance, Granger causality test instructions b and f as exchange rate’s Granger reason. A impulse on b and f makes s moves in the same and opposite direction respectively in the short term, while the long-term responses are both negative.Finally, we use the cointegration equation established above to forecast. With a neutral assumption, the exchange rate is expected to be "1U.S. dollar=4.17yuan" in2020. With a conservative assumption, the exchange rate is expected to be "1U.S. dollar=4.48yuan". And with a radical assumption, The expected exchange rate will be "1U.S. dollar=3.61yuan"...