Research Of Market Transaction Between CNY/RUB On The Background Of CNY Internationalization Process

USD-dominated international monetary system is under a variety of challenges, with the rising power of China’s economy, the role of the RMB in the international financial system will be gradually enhanced. Local currency settlement is an important foundation for the internationalization of the RMB, and it is also the first step of RMB internationalization strategy. In order to promote local currency settlement and improve the RMB exchange rate formation mechanism, The People’s Bank of China carry out the transactions between RMB and non-dollar currencies. The scale of transactions not only reflects the scale of the local currency settlement, but also,to some extent, reflects the RMB in the international community’s acceptance. Based on the time series data, this paper investigate the determinants of currency direct trading between China and Russia through empirical analysis. The static time series model shows that bilateral local currency settlement policy, the size of the Moscow market as well as RMB appreciation against the ruble currency have a positive impact on the transaction turnover. Bilateral trading volume has no significant impact on the turnover, which reflects the negotiation ability in Sino-Russian trade is weak, and this is a microcosm of China’s current trade situation. This paper also expound the role of development of bilateral currency trading on RMB internationalization, and put forward policy suggestions to develop the directly trading between RMB and other kinds of currency.