Research On The Impact Of Exchange Rate Variability On The Import Of Bulk Agricultural Commodities In Zhejiang Province

Zhejiang Province is located in China’s eastern coastal areas,which has a wealth ofgeographical resources. With the government pursuing the reform and opening-up policy, theimport and export trade of bulk agricultural commodities is developing fast. On account of lack ofcompetitiveness and pricing power, exchange rate starts to play an important role in influencingbulk agricultural commodities.Since21st,July,2005RMB exchange rate has been adjusted to a managed-float currencysystem which was linked to a basket of currencies. RMB exchange rate is rising lately andinfluence bulk agricultural import trade through change in import price, corporate profit,appreciation expectations and so an.According to economics theory. RMB exchange rateappreciation will increase value of imports,but decrease value of exports.What’s more, not onlydoes appreciation of RMB effectively mitigate the trade conflict but also help Zhejiang Province toimport agricultural production advanced technique and useful facility.Zhejiang agriculturalenterprises could promote to import foreign some advanced of patents and various high-techproduction equipments during the appreciation of RMB exchange rate.Not only could imporve thecompetitive of agricultural enterprises,but also accelerate the steady of development of agriculturein China so that acquire the pricing control in the international agricultural commodities market.This paper is attempt to analyze about exchange rate how to influence the import of bulkagricultural commodities in Zhejiang Province through theories of InternationalEconomics,International trade and econometrics.It also refer many domestic and foreignliteratures.The data of both RMB exchange rate and import value of bulk agricultural commoditiesin Zhejiang Province are collected from the1stquarter of2005to12thquarter of2012.The result of empirical analysis shows that RMB exchange rate is a significant factor.It hasJ-Curve Effect,so current REER is week to the import. Until half a year,the appreciation of RMBexchange rate has a positive effect to the import of bulk agricultural commodities in Zhejiang Province. REER of RMB is not strongly connected import of soybeans and edible vegetableoil,except for the import of cotton.the The main cause is that soybeans could replace ediblevegetable oil.If import soybeans will have more economic benefits.At last,this paper tries to offer some policy proposals about how to improve Zhejiangagricultural import trade as well as stimulate export.Government should encourage enterprisesimport in order to increase export and put forward policies and measures to support agriculturalproduct processing enterprise.Enterprises should take on transformation and upgrading,usingfinancial instruments to avoid exchange rate risk.