The Relationship Between The Transmission Mechanism Of The Exchange Rate Fluctuations And China's Monetary Policy

With China's rapid economic growth, China's foreign exchange reserves are becoming increasingly more. 2006 is 1 trillion mark, foreign exchange reserves surpassed Japan to become superpower. Particularly after the 1997 economic crisis in other Asian countries generally choose thy-neighbor policy with its one currency devaluation and the export growth pierce the economy, the Chinese government made it clear not to devalue the RMB, and resolutely to ensure economic stability in Asia. Thus, the strong focus of world attention yuan. 2008 U.S. subprime mortgage crisis triggered a global economic crisis, the renminbi has become a target of national attention, the same hope that the appreciation of the RMB. In such circumstances, whether China revaluation, monetary authorities should be how to control exchange rate fluctuations, it has become a major problem. In this paper, fluctuations in exchange rates of monetary policy transmission mechanism and the relationship between the issues. Transmission mechanism of exchange rate fluctuations, exchange rate and China's exchange rate system. Leads to the RMB exchange rate formation mechanism and the relationship between monetary policy, to understand our country in the different periods, under different exchange rate regimes effectiveness of monetary policy. And with the trilemma of the exchange rate mechanism and the relationship between China's monetary policy, exchange rate fluctuations on our country and the monetary policy, foreign exchange reserves and monetary policy, China's monetary policy and exchange rate analysis of the relationship, a better understanding of monetary policy and exchange rate mechanism coordination.Study is the first transmission mechanism of exchange rate fluctuations and exchange rate regime, exchange rate fluctuations in the transmission mechanism of the theory, the analysis of exchange rate volatility transmission process can be seen in the conduction process it has a "barometer" of the function and self-regulate. And analysis of exchange rate volatility transmission process will be subject to factors, what kind of impact. In the exchange system of classification, the classification under the International Monetary Fund to study, draw rate system can be divided into a fixed rate, intermediate rate and floating rate system. China's exchange rate system to enable us to understand China from 1994 to -2,005 in the two exchange rate reform. China's exchange rate volatility and adjustment, as China's international balance of payments surplus double, making China has excess foreign exchange reserves. In order to regulate this pattern of international payments imbalance in the use of a small degree of appreciation is also a need to rely on China's foreign exchange management system reform and economic structural adjustment.Second, the study is the formation mechanism of RMB exchange rate and monetary policy, first under the fixed exchange rate effects of monetary policy analysis, analysis of 1994-2005 under the fixed exchange rate system, the implementation of monetary policy effectiveness, and independence from monetary policy nature of the increase in foreign exchange reserves and the "hot money" coming of three aspects of monetary policy effectiveness. After the understanding of the RMB exchange rate formation mechanism and the relationship between monetary policy, analysis of three different basic forms of exchange rate regime, and proposed the exchange rate mechanism and monetary policy transmission channels. After the last note the exchange rate mechanism reform, the effectiveness of monetary policy, from the adoption of the above "triple paradox" of analysis, comparing before and after the reform on the reform of monetary policy independence and effectiveness of monetary policy after the analysis of both the effectiveness of monetary policy .Exchange rate fluctuations and by studying the relationship between monetary policy, analysis of China's exchange rate change and the relationship between monetary policy, with a triple paradox the exchange rate, monetary policy and capital flows linked to in-depth analysis of the relationship between exchange rate and monetary policy. Further analysis of China's foreign exchange reserves and the relationship between monetary policy, the main research over our country's foreign exchange reserves should be how to adjust. China's implementation of monetary policy is to achieve internal and external balance, domestic monetary policy tool of choice when a statutory deposit reserves and interest rates, foreign exchange rate policy. Domestic monetary policy tools from the interest rates and statutory reserve requirements of both the relationship between them and the exchange rate, foreign exchange rate and the use of Mundell model to illustrate the relationship between monetary policyLast of China's monetary policy and exchange rate coordination, first note the short term monetary policy and exchange rate coordination mechanism between means of control through the hedge to increase the money supply and exchange rate flexibility in both analysis; shows the long term after the monetary policy of China coordination and exchange rate mechanism, on the long term China's monetary policy and exchange rate coordination mechanism gives some suggestions: From the internal point of view, 1. to establish well-developed secondary market instruments and bonds. 2. Improve the domestic capital market. From the external point of view, 1. To further improve the market exchange rate formation mechanism, breeding the equilibrium exchange rate. 2. Deepen the foreign exchange management system, open and orderly capital account. 3. Exchange rate system reform should be coordinated with other policies.Through the above study, in depth analysis of the RMB exchange rate formation mechanism and the relationship between monetary policy and the monetary authorities should be how to improve the Chinese exchange rate system, so that China's financial industry to mature.