Research On The Influence Of International Capital Flow On RMB Exchange Rate

Since the reform and open policy, China has solved the capital shortage in the process of economic development and promoted the development of the export-oriented economy by attracting foreign capital actively.China's rapid economic development makes foreign investment and foreign exchange reserves continue to increase, and "double favorable balance" in current items and capital items appeares enlarge trend, the appreciation of RMB has become the domestic and international focus.In order to keep a stable , health and sustainable development of the national economy, China has controlled the capital flow and RMB exchange rate. As RMB exchange rate reform is not able to 'One Click Is Enough' currently, the study of the effect of international capital flows on RMB exchange rate has a theoretical and practical significance.This paper is combined with the China's economic development and the policies of attracting foreign investment, it studies the changes and characteristics of the international capital flow in China, and the international capital flow in China has played a active role in China's foreign trade and industrial upgrading. It also discusses the influence of the large movement of international capital on the capital markets and the real estate market. The paper is based on the statistic correlation method, and builds a multiple linear regression model, it explores the relationship between the international capital flows and RMB exchange rate from an empirical view. The study shows that there is a significant correlation between China's international capital inflow and RMB exchange rate. It also explains that an substantial increasing of the capital inflow leads to an increasing demand for the RMB and appreciation pressure of RMB. Under an economic game point of the view, it analyses the relationship of the facts such as strategies,cost and profit, and bulids an Game Model betweem the monetary policy authority and the international capital. It studies that selection of appropriate currency appreciation opportunity is important to avoiding or weakening the China's economic impact by the internationnal capital, using policy guidance can make foreign investment serve the national economy well. While we should limit more international hot money into China market and activly make a good time to adjust the RMB exchange rate. Finally the paper puts forward suggestions on RMB exchange rate system arrangements under international capital flow environment, which have certain reference values for gradual reforms of the RMB exchange rate.