Research On The Linkage Between RMB And Foreign Exchange Rates Based On Association Rules

Exchange rate linkage refers to the nature of consistency changes of exchange rate changes in two or more economies.Recently,the continuous escalation of Sino-US trade friction has seriously affected the stability of the RMB exchange rate.Under the background of The Times,fully grasping the linkage between the exchange rate of the RMB and other currencies and clearly maintaining the main influencing factors for maintaining strong linkage are of great significance in responding to Sino-US trade frictions to avoid currency risks and improve the international status of the RMB.The article examines the linkage between the RMB and foreign currency exchange rates by association rules since the Sino-U.S.Trade friction,it is carried out in the following two aspects: From the daily dimension(short cycle)and the week dimension(long cycle),mine rules separately for the exchange rate of RMB and foreign currency to explore whether the exchange rate of RMB and foreign currency has a period regular pattern of change;from the daily dimension,mine the rotation rules of RMB to foreign currency exchange rate and foreign currency to RMB exchange rate,in order to explore whether changes in the RMB exchange rate on that day can cause changes in the exchange rate of other currencies on the next day,and whether changes in exchange rates of other currencies on the same day can cause RMB exchange rates on the next day change.Next,for the five East Asian currencies that have strong linkage with the RMB exchange rate,the state space model is used to analyze the dynamic impact of the RMB foreign currency exchange rate.Based on this,a gray correlation analysis is used to clarify important factors that there is a strong linkage between the RMB and each East Asian currency exchange rate.Through the analysis of the linkage between the exchange rate of RMB and foreign currencies,it is concluded that the linkage between RMB and foreign currency exchange rates on different continents is very different,the strongest linkage with currency exchange rates in Asia,especially eight East Asian currencies including SGD,PHP,INR,THB,MYR,KRW,HKD,TWD,secondly the currency of the four countries along the “Belt and Road” including AED,BHD,SAR,KWD,and the linkage with the currencies of European plate currencies isthe least significant,otherwise the exchange rate between the RMB and the US dollar has also remained strong;besides,there is a certain rotation rule between RMB and foreign currencies.For SGD,PHP,INR,INR and THB that have strong linkages with the RMB exchange rate,the article further analyzes the dynamic impact of RMB and its exchange rate and factors,it is concluded that the impact of the RMB exchange rate on the five East Asian currencies is more sensitive than that of the US dollar,but it cannot be confirmed that the RMB has become the anchor currency in East Asia;the effects of trade integration,differences in trade competition,and international financial factors are important factors affecting the strong linkage relationship between the exchange rate of the RMB and various East Asian currencies,but the effect of the differences in the development of the financial sector is relatively weak.