An Empirical Analysis Of The Relationship Between RMB Exchange Rate Fluctuation And China 's Price Level

Price stability and keep the currency stable are the main policy of the China’s monetary authorities.The relationship of these has become one of the important subject of applied statistics. After revaluation in July 2005, the exchange rate rose, and at the same time, especially in 2010, China’s domestic consumer prices rising.Prices problem has become the top priority in all work of the government macroeconomic regulation and control domestic also jump in the price level, the so-called the "litre fall within" phenomenon. On March 3, at the spot exchange rate of yuan against the dollar in three days of continuous approximation "lowest" position, even at 6.2696 which is a new lowest since October 2012. At the same time, the CPI and PPI were down in 2014, also shows a tendency of decline so far. Now the exchange rate of RMB against the us dollar is rising continuously, but RMB is depreciation. What effect will it be to our country price level? This is our problems for study.So this article is based on July 2005-January 2015 monthly data, through statall software, using VAR model, research the RMB exchange rate and price level in our country on the empirical research.We will find out the RMB exchange rate fluctuations and the inner link between the price level in our country, and analyze the empirical results and related suggestions are put forward.In addition, this paper selected the international oil price and the total retail sales of social consumer goods, and the exchange rate on China’s price level compared to research.