| Exchange rate, as the price index of a country’s foreign exchange market, refers to a country’s currency exchange rate of the currency of another country, the trading price of the stock market and the value of the stockis a relative concept. The stock price refers to the trading price of the stock markets and is a relative concept as well as the ture value of corporate assets. The stock price is referred to as a "barometer" of the national economy of a country.With the increasing integration of the world economy, people come to realize that studying the dynamic behaviors of the domestic capital markets can not ignore the impact of the international capital markets and foreign exchange markets; especially after the reform of the RMB exchange rate regime, the realationship between RMB exchange rate and the domestic price has enhanced, but in the end what about the relevant association between them, we need to do further research.Firstly, this paper starts from the basic theory of the exchange rate and stock prices, on the basis of the flow-oriented model and the stock-oriented model, analysises the relationship of the RMB exchange rate and the domestic price specificly, followed by a discussion between the exchange rate and the price of capital projects, international trade, portfolio conduction mechanism, and then elaborate on the impact of the transmission mechanism between factors, and focus on market-oriented reform of the RMB exchange rate. Finally, using an econometric model, this paper examines the correlation between the RMB exchange rate and the domestic price after the exchange rate reform. The empirical results show that, after the reform, there is mutual causal relationship between RMB exchange rate and domestic price, and then this paper explains the empirical results. in the end, appropriate policy recommendations are given according to the qualitative analysis and quantitative analysis above. |
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