Comparative Study On The Influencing Factors Of RMB Exchange Rate Before And After "811 Exchange Reform"

In recent years,With the gradual deepening of China's exchange rate marketization reform and continuous progress in the process of internationalization,the RMB exchange rate faces an opportunity as well as a huge challenge.In particular,on August 11,2015,when the central bank further implemented the exchange rate quotation mechanism,the exchange rate of the RMB experienced a period of steady appreciation,continued depreciation,and a gradual appreciation.The exchange rate showed a new feature of two-way fluctuations.Behind the policy adjustment,it means that market forces gradually emerge,and the economic factors that affect the fluctuation of the RMB exchange rate may also change.In view of the new changes in exchange rate volatility before and after the exchange reform,it is particularly urgent and necessary to thoroughly analyze the reasons behind the changes,explore the influencing factors of the exchange rate fluctuation of the RMB,and fully understand the internal mechanism of exchange rate fluctuations.This paper reviews the Western classic exchange rate determination theory and systematically reviews existing research literature on exchange rate determination mechanisms.Research hypotheses are proposed based on a comprehensive analysis of the dynamic relationship between exchange rates and various economic factors.Money supply,economic growth,market expectations,foreign exchange reserves,and stock market volatility is used as the five variables that mainly affect the fluctuation of the RMB exchange rate.Since “811 Exchange Reform” is an important time node for new changes,the data of RMB exchange rates before and after the exchange reform were collected and a two-stage VAR model and VEC model were constructed.By using impulse response,variance decomposition,and cointegration tests,the economic mechanism of RMB exchange rate was analyzed and compared.The research conclusions show that after the “811 Exchange Reform”,the exchange rate of the RMB becomes more flexible,and the effects of various factors on the exchange rate and its degree of influence are very different from those before the exchange rate reform.(1)Whether in the long or short term,expectation is the main factor in determining exchange rate fluctuations;(2)Money supply has a long-term impact on exchange rates;(3)Foreign exchange reserves is the direct factor that determine the exchange rate changes;(4)The effect of stock market volatility on exchange rate is significantly enhanced.Based on this,this paper puts forward the following suggestions from both corporate and government sides: Foreign trade companies should raise risk awareness;Promote the construction of an early warning mechanism for exchange rate risks;Reasonable choice of foreign exchange derivatives to avoid risks.The government should reasonably control the growth rate of,strengthen exchange rate expectation management,and create a linkage mechanism between the stock market and the foreign exchange market in an effort to control and prevent systemic financial risks.