Influence Of Hong Kong Offshore RMB Market On Cross-border Speculative Funds

Since the RMB settlement in cross-border trade was allowed in July 2009,Hong Kong offshore RMB market has generated offshore interest rate and exchange rate which were different from onshore ones in mainland China.They have formed the foundation of cross-border arbitrage of speculative funds plus the RMB appreciation expectations.The phenomenon not only disrupts the formulation and implementation of macroeconomic policies,but also leads to serious threats to the financial and economic stability in China.Therefore,it is of great significance to study the impact of Hong Kong offshore RMB market on China's cross-border speculative funds,which is of great significance for the construction of Hong Kong international financial center and the stable development of the national economy.This paper firstly clear the general connotation of the offshore market and the development of Hong Kong RMB offshore market,then analyze the influence mechanism of Hong Kong offshore RMB market on cross-border speculative funds;secondly,the paper specifically summarizes the flow channels of cross-border speculative funds through Hong Kong offshore RMB market;thirdly,accurately estimates the amount from Hong Kong RMB offshore market and then expands Interest rate parity theory to build multiple-arbitrage model.By using ARDL-ECM model to test the relationship between RMB interest rate differences,RMB spot price differences,the change of RMB expected exchange rate,the return rate of stock market,the amount of cross-border RMB trade settlement,the balance of RMB deposits in Hong Kong and China's cross-border speculative funds,the paper finds that from 2009 to 2015 RMB interest rate differences,RMB spot price differences,the return rate of stock market and the amount of cross-border RMB trade settlement are the significant factors affecting foreign speculative funds.At the same time,in order to examine the impact of Hong Kong RMB offshore market on China's offshore speculative funds,we must realize that the RMB offshore market is not mature.In this paper,by analogy analysis,refer to the development experience of offshore financial center in Russia,to provide reference and enlightenment for the development of RMB offshore market.Accordingly,in order to prevent the severe consequences of the cross-border speculative funds flow instability,this paper from the perspective of Hong Kong RMB offshore market,on the basis of theoretical analysis and empirical conclusions,puts forward the corresponding policy recommendations.