The Impact Of The Bilateral Exchange Rate Volatility To The RMB Internationalization

As China has achieved remarkable results in such key areas as improving global financial governance,promoting international trade and investment,and boosting global economic growth,the RMB internationalization has become increasingly significant.As an important factor affecting the process of the RMB internationalization,exchange rate fluctuations have an actual significance in analyzing the impact of the RMB internationalization process.After the “811” Exchange Reform in China in 2015,along with the improvement of the US economy and the Fed's rate hike,the RMB depreciated sharply,and the exchange rate changed from a unilateral volatility in the context of appreciation to a bilateral volatility,which fluctuates in alternation of appreciations and devaluations.In the same period,the RMB internationalization had a short-term stagnation.Therefore,this paper mainly analyzes the impact of exchange rate fluctuations on the internationalization process of the RMB before and after the “811” Exchange Reform,and puts forward some suggestions on this basis.Therefore,based on the results of previous studies,this paper firstly discuss the ways how the exchange rate fluctuations influence the internationalization of mainly currencies,and the international experience how the exchange rate fluctuations works on the internationalization of currencies,and secondly using the quarterly data from the first quarter of 2010 to the third quarter of 2017 to build a benchmark model,which depend on the RMB internationalization.And successively add items to the benchmark model,such as RMB appreciation rate,exchange rate fluctuations,interaction items of the RMB appreciation and fluctuations,interaction items of the exchange rate fluctuations and “811” exchange-change dummy variables to compare “811” exchange rate fluctuation before and after the Exchange Reform and to analyze whether the internationalization process has an asymmetric effect;then using the monthly data from the first month of 2011 to the first month of 2018,to construct a vector error correction model,using impulse response and variance decomposition to analyze the impact of exchange rate bilateral fluctuations on the RMB transaction media functions and value storage functions.Finally based on theory and the empirical conclusions,providing reference policy recommendations about the RMB internationalization.The conclusions of this paper are as follows: First exchange rate fluctuations have a significant adverse effect on the RMB internationalization.Final exchange rate fluctuations have an asymmetric impact on the process of the RMB internationalization,and after the “811” exchange reform,the negative effect of the RMB internationalization is weakened.