Effects Of Exchange Rate Movements On Modern Service Industry

Under the condition of open economy, changes in exchange rates run from the multidimensional impact of the national economy as a whole. Reform of RMB exchange rate mechanism and exchange rate adjustments will inevitably have an impact on China’s economic growth.This article will proceed from the impact of exchange rate movements on modern service industry, using the financial services and hospitality industry as research objects, explore the international exchange rate movements in the conduction of commonalities and differences in different sectors. At the same time, resolution foreign exchange payments for international services trade balance balancing role for different industries in the face of China’s modern service industry related to RMB exchange rate changes select development paths provide theoretical analysis and empirical test results. And aimed at maintaining exchange rate stability and achieving balanced development of modern service industry in China, this paper proposed the relevant suggestions.First of all, the article uses banking assets debt ratio and total assets net interest rate to measure the risks and benefits of commercial banks. Through the analysis of panel data model, results show there is a long-run equilibrium relationship between RMB real effective exchange rate and the ratio of assets liabilities, total assets interest of commercial banksin taking macroeconomic environment changes into account. In the short term RMB real effective exchange rate’s effects on commercial bank’s asset-liability ratio of total assets and net interest rate are not significant. Meanwhile because ofthe different development stage among banks, different commercial banks in the face of the impact of exchange rate movements vary. Secondly, it selected the CSI300index and Hong Kong’s Hang Seng index as the samples, then compareand analyze the specific reaction of the capital market in mainland and in Hong Kong when RMB exchange rate fluctuations occur. The VAR Co-integration test results showed that the influence of exchange rate movements on the stock market is significant. There is long-run equilibrium relationship between RMB exchange rate and the Hang Seng index and the CSI300index.Then, explore the relevance of exchange rate movements and foreign exchange earnings from tourism or the number of inbound tourism by establishing a VAR model; In the long term, the rise of exchange rate will promote increased foreign exchange earnings in tourism. In addition, adding economic factors by using panel data model, analyze the impact of the real effective exchange rate on the foreign exchange earnings of inbound tourism. In the short term, the real effective exchange rate’s impact on foreign exchange earnings of inbound tourism is not obvious. Furthermore, due to the imbalances of the development on tourist industry in different regions of China, the impact of real effective exchange rate on domestic tourism in different place also varies.On the specific research methods, this article combines qualitative and quantitative research; Qualitative analysis is based on the universality of the theory as a basis, Quantitative analysis based on data platform as well as econometric research methods, including time series data model, a panel data model, etc. Through testing the relevant assumptions of mathematical model analysis, we look forward to more objectively and comprehensively reflect the conduction and the effects of the RMB exchange rate fluctuations on the modern service industry.On the flame of this paper, it sets out the background, significance research, objectives, methods, ideas and innovations of the research (Chapterone).Then we analyzed thedevelopment process of international exchangerate determination theory as the theatrical fundament of the full article andconducted a literature review about the impact of exchange rate movementson the financial industry and on the tourism industry (Chapter two). Wedescribe the status of financial institutions and financial markets as well astourism and review the concrete impact of international exchange ratemovements on the financial sector and tourism(Chapter three). By constructinga model and empirical analysis, the paper illustrates the transfer process of theexchange rate in banks and other financial institutions, and the impact ofexchange rate fluctuations on the banking industry (Chapter four). Wecompared the different changes on the prices of capital markets in Hong Kongand in mainland China in response to exchange rate movements(Chapter five).Through empirical analysis, we examine the impact of exchange ratemovements on the overall development of tourism. And exchange ratemovements on the implications of tourism development in different areas.Through empirical analysis, we examine the impact of exchange ratemovements on the overall development of tourism and tourism development indifferent areas (Chapter six). Finally, we propose appropriate policyrecommendations. We want to preserve stability of RMB exchange rate. Weneed to ensure the safety of commercial banks under the exchange ratefluctuations. We have to reform the capital markets to enable it better torespond to changes in currency exchange rates and correctly guidereasonable investments of foreign capital in the country. We need to promoteactively the development of tourism in our country, and give full play to its roleon international trade rebalancing (Chapter seven).