Study On The Mechanism And Effect Of American Interest Rate Policy On China's Exchange Rate Level

Interest rate and exchange rate are the two core transmission variables of international macroeconomic influence.Under the open economic conditions,the transmission mechanism between the two variables,based on the relational classical theory of interest rate and exchange rate,will make the big countries' interest rate policy have spillover effect on the exchange rate level of other countries.The mechanism and effect of interest rate policy on the level of exchange rate has been a key issue in the field of macroeconomic research.On December 17,2015,the Federal Reserve raised interest rates,which meant that interest rate policy in the United States began to change,and the original low interest rate policy would be replaced by a new round of interest rate policy.As a manipulator of the US dollar,the American interest rate policy will have an impact on China's exchange rate.Especially the "One Belt And One Road" will be implemented in China to deepen economic opening-up.In the future,the RMB exchange rate level will introduce more market freedom mechanism,and study the influence of us interest rate policy on China's exchange rate in the context of liberalization and internationalization.In theory,it can further improve the research on the interaction between interest rate and exchange rate of the two major countries in the open economy.In reality,it can also provide suggestions for maintaining the relative stability of the RMB exchange rate and promote the healthy operation of the China's economy.Based on the two variables of interest rate and exchange rate,this paper makes a comprehensive understanding of the classical theories of the transmission mechanism between the two variables by consulting relevant literatures.After theoretical analysis,this paper explores the path of American interest rate policy on China's exchange rate level,analyzes the transmission mechanism between them in multiple perspectives,and then establishes a model to empirically test the influence of US interest rate policy on China's exchange rate level,draw conclusions and put forward corresponding countermeasures and Suggestions.There are several main points in this paper: the mechanism of the influence of US interest rate on China's exchange rate is clear;Under completely open conditions,the mundell-fleming model between the two countries can automatically achieve the equilibrium between the interest rate and exchange rate level of the two countries.The empirical test shows that there is a long-term co-integration relationship between US interest rate and China's exchange rate,that is,the US interest rate policy will have an impact on China's exchange rate,but its impact is limited,and China's exchange rate level is more influenced by China's own economic conditions.In the face of the change of interest rate policy in the United States,China should change passivity into initiative,ready to respond to the following several aspects: unswervingly maintain China's overall economy smoothly,provide support for exchange rate relatively stable;To increase the flexibility of interest rates and exchange rate policies,to increase the resilience of China's macro-economy;To coordinate the interest rate,market reform of the exchange rate,and the use of the One Belt And One Road to actively promote the internationalization of the RMB.