Empirical Analysis Of Exchange Rate Fluctuations On The Impact Of China's Domestic Commodity Prices

Nowadays the frequent exchanges increase in the world economy. The fluctuations of foreign exchange rate have influence on the economy, the importance of which has been raised to an unprecedented degree. As is known to all. with the efforts to integrate into the world economic arena. China is facing an unexpected economic background of long-term appreciation of RMB. Especially since a 2% appreciation of the RMB against dollar was done on July 21. 2005. the fluctuations of the exchange rate of RMB against dollar increase more and more. China is now on the path of export-oriented outgoing economy. Trades of import and export play an important role in the growth of China's economy. And the volume of the import & export trade also possesses a large proportion in the national economy. In this context, to explore the impact of economic fluctuations in foreign currency exchange rates have a more far-reaching significance. In the writing process, after comprehensively considered the various influence of fluctuation of foreign currency exchange rates on economy, the perspective of the influence of currency fluctuation on commodity prices is analyzed from this perspective.Since we hold that the changes of national commodity prices keep the closest relation with the daily life of producers, traders and consumers as the majority of the population in China. It is of more practical significance to guide the economic behavior for us average people to understand those changes.In the empirical models, we selected natural rubber of higher import dependence among those types selling in the market as an example for analysis. Given that the present futures varieties were all tradable goods, currency exchange rate fluctuation removing mechanism can be used to analyze the influence of the commodity price in futures market. On this basis three regression analyses are made separately on the data of natural rubber in futures market and cash market. It needs to be particularly pointed out that it is of no sense to make series data regression because of the existence of breakpoint since the one-time revaluation of the RMB by 2% on 21 July. Therefore the regression analysis of futures market takes 21 July, 2005 as its limit. Analyses are made separately before and after this limit. In the regression of cash market, since the choice of data is from December 2005 to the present in which the breakpoint of 21 July, 2005 is not included, only one regression analysis is done. The whole article, according to structure, is divided into six chapters: Chapter One is an introduction which gives a systematic introduction to the significance of this writing, thinking frame , and the current literature in the related fields; Chapter Two and Three introduce theoretically the pass-through effect of exchange rate fluctuations on commodity prices, among which Chapter Two analyzed from the perspective of the influence of currency exchange rate fluctuation on import & export commodity prices. Chapter Three is written from the perspective that currency exchange rate fluctuation has pass-through effect on China's national futures commodity price in the futures market; Chapter Four and Chapter Five introduced the empirical models of price-transfer chain and the empirical analysis on the natural rubber market, among which Chapter Five gives systematic introduction on the multiple linear regression model selected in the empirical analysis of this article. Finally, in Chapter Six data of natural rubber are selected separately from futures market and cash market for the three regression analyses. Accordingly the conclusion of the whole article is drawn and strategy recommendations are raised forward.