Research On The Interaction Between Exchange Rate Changes And RMB Internationalization

Since the launching of the RMB settlement pilot for cross-border trade in 2009,the process of internationalization of RMB has made continuous breakthrough.Although RMB has not yet become the main currency reserve for most countries,the offshore RMB market,mainly based in Hong Kong,has been expanding.The share of RMB in international payment has ranked fourth,right following USD,EUR and GBP.The IMF has also officially incorporated RMB into its special drawing rights(SDR)currency basket on October 1,2016.However,RMB has not achieved the corresponding international influence and status compared to China's economic strength.One of the important reasons is that China has not fully liberalized its capital account under its imperfect financial market.According to the "ternary paradox",based on the Mongolian Flemming model,proposed by Krugman after the Asian financial crisis,the free flow of capital is closely connected with the issue of exchange rate which is another major problem facing the present RMB,including the relationship between the exchange rate system and the exchange rate trend.The"811 exchange reform" in 2015 released the negative expectation of RMB,which drew extensive attention from international level.Trump claimed that after taking office he would label China as a currency manipulator.On the other hand,the exchange rate of RMB kept dropping after the release of predicting depreciation.On the contrary to the upcoming trend since 2005,China's foreign exchange reserves have fallen to 3 trillion US dollars,falling by about 24%of the highest point in June 2014.As the largest RMB offshore market,Hong Kong has only 627.6 billion yuan RMB deposit in the market,dropping 34%by the highest point at December 2014.RMB share of international payments and cross-border trade in RMB settlement business balance has declined,there are indications that the process of internationalization of the RMB due to devaluation of the exchange rate has been seriously hampered.If we want to continue to promote the process of internationalization of RMB,we should look for new ideas on the basis of studying the issue of RMB exchange rate.Based on the above facts,this paper focuses on the analysis of the relationship between exchange rate and RMB internationalization process,at the same time from the international monetary value storage and payment of two focus on the valuation perspective in the process of RMB internationalization of RMB Offshore RMB deposit scale and international payment share two indicators.The analysis from two aspects of theory and practice,in the analysis of exchange rate and currency internationalization,the mutual influence mechanism of the main international currency internationalization experience,analysis of the development status of RMB internationalization and the empirical model on the basis of the empirical analysis,we concluded that:(1)the change of RMB exchange rate significantly affects the process of internationalization of RMB,no matter the monetary value of storage from the perspective of the scale of offshore RMB deposits denominated in RMB or international payment market perspective is significant,due to the appreciation of both scale(share rose),devaluation leads to reduced scale(both reduce the share);(2)for the internationalization of the RMB exchange rate movements on the impact of differences in the two perspective,the current stage of change scale of offshore RMB deposits for the impact of exchange rate changes of RMB share is not significant,the changes in international payments has a significant effect on the increase of RMB exchange rate changes,the international payment market will lead to the devaluation of the RMB exchange rate.Finally,in view of the proposal to promote the internationalization of RMB,this article holds that China should pay more attention to the changes in the share of RMB international payment relative to the RMB deposits abroad.