The Arbitrage Of The Renminbi Offshore Market In Hong Kong And The Impact On The Renminbi Exchange Rate Difference

As one of international financial centers,Hong Kong could play an important role in promoting RMB internationalization smoothly and “One Belt One road” financing.Focusing on arbitrage behaviors on the RMB offshore market in HK,by systematic studies to identify different arbitrage types and in-depth analyses of the impact of arbitrages,could discover and prevent risks of arbitrages as early as possible.Then that could facilitate the sound development of HK market and the effective interaction between HK market and the mainland onshore market.The paper firstly introduces arbitrage space from two aspects: HK RMB offshore market and the existence conditions on which arbitrage behaviors depend.According to those conditions,the classification of arbitrage behaviors is sorted out.And the flowing channels of arbitrage capital between the mainland market and HK market would be analyzed in this article.The article selects RMB exchange rate differential between offshore and onshore markets as the affecting object of arbitrages.The GARCH model shows that as the arbitrage scale on HK's RMB offshore market expands,the difference between CNY and CNH narrows.That is,the two markets gradually develop to the same direction.The increase of arbitrage scale will sharpen the fluctuation of the difference.Finally,the paper makes some policy recommendations on classifying supervision,improving RMB reflow mechanism,strengthening construction of offshore market in HK,and maintaining stability of RMB.