Research On The Impact Of China's Short-term Cross-border Capital Flow On The RMB Exchange Rate

Under the trend of economic globalization and trade globalization,China has been able to convert current accounts under the balance of payments account from the last century to the current steady progress of capital account convertibility,and the degree of opening up of capital projects has continued to deepen.As a result,cross-border capital flows flowed into and out of China through channels such as current projects and capital projects.While promoting the development of our country’s entities,it also had a profound impact on the exchange rate fluctuations of the Chinese renminbi.In particular,short-term cross-border capital flows are characterized by profitability,large scale,and sudden changes in the direction of the flow,which seriously interferes with the balance of supply and demand for the RMB in the Chinese foreign exchange market.In recent years,China has actively promoted the internationalization of the renminbi and the construction of the "One Belt and One Road",which has prompted large-scale domestic investment in overseas investment.At the same time,under the background of increasing downward pressure on the Chinese economy and the background of the post-QE era,short-term cross-border capital changes its direction of flow:outflows from China and flows into advanced economies.The combination of multiple factors has led to two-way volatility in China’s capital projects,and the magnitude of the deficit has reached a historical high.As a result,the RMB exchange rate has correspondingly experienced two-way fluctuations that have affected the stability of China’s financial markets.Therefore,the study on the impact of short-term cross-border capital flows on the RMB exchange rate plays a crucial role in stabilizing the reasonable equilibrium of the Chinese RMB exchange rate and preventing systemic financial risks.Based on the "three-paradox theory",exchange rate determination theory,and international capital flow theory,this article systematically elaborates short-term cross-border capital flows and capital projects(such as CSI,QDII,QFII,RQFII,etc.)on the fluctuation of RMB exchange rate.Influence Mechanism.Based on the status quo of short-term cross-border capital flows and capital projects in China,the VAR model is further constructed,and theoretical modeling and empirical demonstrations of China’s short-term cross-border capital flows and the impact of capital projects on the RMB exchange rate are studied.The main contents of the thesis are as follows:Firstly,it summarizes and summarizes related documents such as short-term cross-border capital flow measurement system and exchange rate determinants,and raises issues for further study.Second,with the aid of statistical data related to cross-border capital flows,we analyze the short-term cross-border capital flows in China and the characteristics of the current internationalization of the renminbi and indicate where the problems lie.Third,through the analysis of China’s short-term cross-border capital status and the characteristics of capital account convertibility,we will seek the direct and indirect impact of short-term cross-border capital flows on the path of the RMB exchange rate,explain the mechanism behind the path,and lay a solid foundation for model building.The theoretical basis.Fifth,based on the research of scholars,the scale of short-term cross-border capital flows in China is measured,and a VAR model that influences the exchange rate of RMB in short-term cross-border capital flows in China is established,and cointegration tests,impulse responses,and variance decomposition are performed.Sixth,combining the development status of China’s short-term cross-border capital flows,short-term cross-border capital flows,and the degree of impact of various capital projects on the RMB exchange rate,put forward the policy recommendations for preventing the occurrence of systematic financial risks in the process of exchange rate marketization of the Chinese RMB exchange rate.This paper uses the literature deduction method,comparative analysis method,multivariate statistical analysis method and theoretical modeling method to arrive at the following main conclusions:First,China’s short-term net inflow of cross-border capital will directly promote the appreciation of the renminbi;Second,Shanghai(deep)The impact of net inflows by QCII,QDII,QFII,and RQFII on the appreciation,depreciation,appreciation,and depreciation of the RMB exchange rate,respectively,is in a direction of varying degrees of influence.Third,China’s short-term cross-border capital and various capital projects will indirectly affect the RMB exchange rate appreciation through domestic and foreign interest spreads and the expected appreciation of the renminbi;through the relative inflation differential and the central bank’s 7-day reverse repurchase interest rate,it will indirectly affect the RMB exchange rate depreciation.This paper uses the method of qualitative analysis and quantitative test to combine the results of the previous study,and provides the author’s policy recommendations:First,continue to promote the process of RMB internationalization and improve the exchange rate formation mechanism;Second,capital account liberalization should be compatible with exchange rate marketization.Matching;third is to strengthen macro-prudential supervision and establish risk early warning mechanisms.