Research On The Linkage Of Exchange Rate Fluctuation And Stock Price

Exchange rate is the relative price of a currency and foreign prices, which reflects changes in the international purchasing power of currency changes. Stock market price is a country's economy "barometer", which reflects the changes in the subtle changes in the real economy. Exchange rates and stock prices are reflected in the foreign exchange market and capital market prices, but also reflects a country with an important indicator of economic strength. These two indicators are interlinked and mutually checks and balances of help to analyze the linkage relationship between the overall economic balance between internal and external constraints factor, therefore, study the linkage between exchange rate and stock market will help further improve China's financial system, and on how to avoid sharp exchange rate fluctuations and the risk of price rises and falls of great theoretical and practical significance.This article is divided into five parts, Part 1 introduces the introduction of foreign exchange rate fluctuations and stock price on the linkage between research and literature review, articles, and the main research methods used, and innovation; s Part 2 is about the exchange rate fluctuations and stock price linkage between the basic theory; Part 3 is the Japanese "Plaza Accord" has brought significant appreciation of the currency and thus the stock market collapse triggered a review of historical events, analysis was from the yen's appreciation to the internal transmission mechanism of stock market crash and the painful lesson to be; Part 4 by recent data on the exchange rate volatility and stock price linkage mechanism for an empirical test; Part 5 through the first analysis of the current Chinese foreign exchange market and the degree of capital market linkage and the pros and cons of performance, and then how to improve China's financial market system recommendations.This article uses econometric methods to fluctuations in exchange rates and stock prices on the relevance of research, the use of real effective exchange rate and the closing price on the Shanghai Composite Index as a model sample of monthly data, hoping to prove more updated data between the two Linkage relationship. In the existing literature, scholars are mostly only concerned with whether there is correlation between the two, and the direction of causation and other issues. On this basis, the paper seeks a comprehensive analysis of the existing exchange rate system in China under the foreign exchange market and stock options linked to the national economy brought about by the pros and cons, on how to use this linkage between promoting economic development and the direction towards the internal and external balance How to avoid such economic fluctuations caused by joint policy recommendations are given.