Research On The Influence Of Exchange Rateand Exchange Rate Expectation On RMB Settlement Of Cross-border Trade

In the past 40 years of reform and opening up,China’s economy has developed rapidly.By 2010,the total economic output ranked second in the world,and the scale of trade ranked first in the world.After the financial crisis in 2008,the exchange rate of major international currencies such as the US dollar and the euro increased,and the voice of RMB internationalization continued to increase.Since 2009,the Chinese government has actively promoted the settlement of cross-border trade in RMB as a breakthrough for the internationalization of the RMB.Cross-border trade RMB settlement refers to the function of RMB to implement the medium of exchange in international trade.The state allows designated and qualified enterprises to settle cross-border trade in RMB on a voluntary basis.Import and export enterprises can use RMB.For settlement,residents can pay RMB to non-residents,and non-residents can hold RMB deposit accounts and conduct international settlement.The development of cross-border trade RMB settlement business is affected by many factors,among which exchange rate is one of the main influencing factors.Since the exchange reform on July 21,2015,the exchange rate system of the RMB for 11 years has been replaced by a managed floating exchange rate system.After the exchange reform,the RMB has been in an appreciation for nearly 10 years.The US dollar exchange rate rose from 8.27 in 2005 to 6.12 in December 2014,and the cumulative appreciation reached 35.1%.In the context of the appreciation of the renminbi,the cross-border use of renminbi has increased significantly.However,after the " 8.11 exchange reform " in 2015,the renminbi depreciated,and then there was a trend of "rising and rising,two-way fluctuations".Under this background,the growth rate of the renminbi slowed down.In the obvious period when China’s economy is transferred to the new normal and the RMB exchange rate fluctuates in two directions,studying the impact of exchange rate on RMB settlement of cross-border trade is conducive to providing practical guidance for the practice of RMB settlement of cross-border trade at this stage,which is conducive to accelerating the internationalization of RMB.There are many ways to influence the RMB exchange rate and exchange rate expectations on the cross-border settlement business of RMB.From the micro level,the enterprise starts from the perspective of maximizing the profit of the manufacturer,taking the exchange rate variation factor into consideration of the demand function and the profit maximization function.We are willing to choose a currency with a stable currency as the currency of the valuation,thus reducing the risk that exchange rate fluctuations bring to the enterprise.In addition,in order to limit the fluctuation of relative price of products,without deviating from the price of competitors in the industry,manufacturers are more willing to choose the same pricing settlement currency as competitors,forming a "herd effect",so when the exchange rate and the marginal cost of the manufacturer are linked,When large,the exchange rate factor will have a big impact on the choice of settlement currency.From a macro perspective,exchange rate changes will have an impact on economic and trade,which will directly affect the cross-border settlement of RMB.When the renminbi appreciates,China’s import business increases,while cross-border trade renminbi settlement is mainly concentrated in China’s import business.In addition,the fluctuation of exchange rate directly affects the stability of the value of the renminbi,and the stability of the currency will affect the attractiveness of the renminbi as a settlement currency,value storage instrument and international reserve currency.The appreciation of the renminbi will also lead to an increase in speculative currency demand.This paper summarizes the current situation of cross-border use of RMB in China,and sorts out the theoretical mechanism of exchange rate and exchange rate expectations affecting cross-border settlement of RMB.From the fluctuation of RMB exchange rate and the expectation of rising value,the maximum profit of manufacturers in import and export trade,speculative motive,monetary value In-depth research on aspects such as stability and mutual influence.After that,based on relevant theory and empirical analysis,the multivariate linear regression(OLS)and vector autoregressive(VAR)models were used to analyze the RMB exchange rate changes,the RMB appreciation(Depreciation)value expectations and the depth of the offshore RMB financial market development for cross-border trade.The impact of the settlement amount,using the impulse response function graph to test and describe the econometric significance of the model.In the end,it is concluded that:First,the appreciation of the renminbi can expand the renminbi settlement of cross-border trade.Second,the RMB exchange rate is expected to promote the development of cross-border trade RMB settlement business in a short period of time.However,with the improvement of the financial market system,the continuous reform of exchange rate marketization,the narrowing of domestic and overseas spreads,and the reform of the national regulatory system,exchange rate expectations The impact on cross-border use of the renminbi will gradually shrink.Third,the depth of development of offshore financial markets has the greatest impact on the scale of RMB settlement,which is a positive impact.Fourth,as China’s economy enters a new normal,the promotion effect of China’s various macro-financial factors on RMB settlement is gradually reduced and tends to be reasonable.The implementation of the "One Belt,One Road" strategy can expand the use of RMB cross-border settlement.Therefore,in the context of the new economic normality and the two-way fluctuation of the RMB exchange rate,on the one hand,we must adjust our mentality to accept the fact that the RMB settlement of cross-border trade is growing slowly or even negatively.On the other hand,we must focus on the "One Belt,One Road" strategy.The use of RMB across borders.In this regard,it is necessary to improve the RMB exchange rate formation mechanism;enhance the flexibility of the RMB exchange rate,relax the scope limit;reasonably guide the market expectations of the exchange rate,prevent and control the risk of over-adjusting the RMB exchange rate;promote the construction of the offshore RMB market,strengthen the joint development of offshore markets;Two-way circulation and circulation mechanism to enrich RMB investment channels.