Research On The Impact Of RMB Exchange Rate Changes On China's Commodity Prices

As the global economy continues to grow,the global macroeconomic and price indices are affected by large fluctuations in commodity prices.China is the second largest economy in the world after the United States and the largest developing country in the world.China's economic development must rely on a large number of bulk commodity imports.At the same time,in the process of gradual internationalization of the RMB,China's government departments,import and export enterprises and investors need to take into account the changes in commodity prices when exchange rates fluctuate in making decisions.In global commodity trading,the exchange rate is the representative of the relative purchasing power of the currency,which determines the trend of commodity prices.Therefore,it is of great significance to explore the impact of RMB exchange rate changes on commodity prices.Therefore,based on the theoretical and empirical views of the existing literature,this paper uses China's real effective exchange rate of RMB and commodity prices to conduct empirical research,providing empirical evidence for policy formulation and investors' strategy selection.In the past two years,the international economic situation and trade relations have changed a lot.This paper selects the latest data to study the impact of RMB exchange rate changes on China's commodity prices.On the basis of summarizing prior scholars' research results,this paper systematically combed the relevant theoretical foundations,not only classified the existing theories from the macro level and the micro level,but also summarize the impact of RMB exchange rate changes on China's commodity prices combined with the actual factors such as the production layout of China,the market structure and special policies.Then this paper analyze the influence of exchange rate changes on different types of commodities.In the aspect of empirical analysis,the paper adopts multiple empirical tests to deeply analyzes the influence of exchange rate changes on bulk commodities.The empirical analysis conclusions are basically consistent with the research hypotheses in the theoretical analysis part of this paper.The RMB exchange rate has a negative correlation and negative impact on the overall price of bulk commodities and different types of commodity prices.But due to the different actual trade situation,production and market structure of different types of commodities,the impact of RMB exchange rate changes on different types of commodity prices is significantly different.This paper has obtained the following conclusions through empirical tests:(1)Changes in the RMB exchange rate have a negative impact on the overall price of bulk commodities,and this effect is consistent in the short-term,long-term and dynamic relationships;(2)Due to the natural hedging characteristics of precious metals,the financial attribute is so strong that the price changes of precious metals are the most severe;(3)The fluctuation of the RMB exchange rate has the longest lag effect on non-ferrous metal commodities,the negative impact is significant,but the transfer rate is not high;(4)Changes in the RMB exchange rate in the short term will affect the commodity prices of non-metallic building materials,but this effect is not established in the long-term relationship based on the horizontal quantity.The exchange rate fluctuations have a lagging effect on their prices;(5)Due to the high degree of marketization,the exchange rate fluctuation has large influence on chemical commodity prices.(6)Due to administrative regulations and their vulnerability to environmental factors and cyclical production,cereals,oils and fats,soft commodities,and agricultural by-products are less affected by exchange rate fluctuations,but there are also differences among different classifications.(7)For energy and coal coke steel products,most of these commodities belong to coal-steel industry chain.This industry chain is dominated by China,and it is mainly based on self-production and sales,so there doesn't exist a cointegration relationship.Based on the above analysis,this paper proposes four policy recommendations: First,we must improve the early warning and prevention mechanisms to effectively deal with the impact of exchange rates fluctuation on commodity prices;second,the effect of exchange rate on commodity prices should be fully considered when implementing monetary policy;the third is to enhance China's ability to influence commodity prices;the fourth is to continue to implement market regulations for strategic materials that have an important role in economic security.