The Study Of Impact On Stock Market Of Exchange Rate Fluctuations

Exchange rate refers to the relative price when one national currency exchanges to a foreign currency. If the exchange rate changed, then the purchasing power of foreign currency holder will also change. Meanwhile the price of the stock displays the national economy eventual status. If the exchange rate changes, it will act on the real economy itself. Our country began to gradually deeply carry out the Reform and Opening up in the80s, accompany with the globalization began to deepen, the influence on China’s stock market by exchange rate becomes to more and more obvious. Because of the subprime crisis happened in the United States, which led to a piece of bottom of the world economy, RMB has been slowed down the rapid appreciation. Moreover, China’s stock market turned the bull market to bear market during2007and2008, and stock prices drop down. At that time China has not totally opened up the capital account, so the international hot money cannot smoothly join in the negotiable securities of our market, which led to a weak impact on real economy. But due to the imperfect financial regulation, it still has a lot of international hot money go into our country’s stock market through the abnormal channel, which broadens the jeopardy of the financial crisis. As the result, RMB appreciated as a rapid step, and there are unfavorable effects on the development of the stock market. It is because of the above reasons, so the discussion to the connection between exchange rate and stock has an important practical significance. Our country may, according to the mutual connection between the exchange rate and capital market, plan the respond measures, implement the regulation of macro economy, and reach the good development of the stock market. Countries can timely stop the rumors among the foreign market and stock market, fundamentally reduce the probability of the crisis, and let our country’s national economy get an orderly development.This article is based on the discussion of domestic and foreign scholars study, improved with the collection of real data, which are the exchange rate change, and China’s a-share index to take analysis research. In the empirical analysis modeling stage, I take GARCH measurement model, take off the analysis of the data, try to find out the relationship of the change of the exchange rate and economic, developed with their linkage relations. In this paper, I adopt comprehensive research analysis and discuss the stock market fluctuations along with the RMB appreciation. Finally I summarize the suggestions, and put forward the corresponding claim. This paper is divided into five parts:the first part is introduction, which generally introduces the research background, purpose, significance and the trends of research. Exchange rate is involved in the relevant theories of the second part. In the third part, I mainly use GARCH measurement model empirical analysis, and analyze the causes. The fourth part put forward the corresponding countermeasures as well as the claims. The final part is the summary, and forecast the future development trend.