The Study Of RMB Exchange Rate And Inflation Risk

There is still a matter of scale on both the duration from the unprecedented inflation in our country due to the impact of U.S. subprime mortgage crisis since 2007. The current round of price increases affect our lives so wide that it has changed us greatly, especially in the CPI inflation and the rapid rise in the continuing trend by the date of September 2010. The CPI index in domestic nation rose 3.6%. It is the highest scale in recent years. As the consumer price index CPI, it has close relationship with people's life. So we can build inflation risk assessment system by studying the impact of exchange rate fluctuations on domestic prices and the related factors to achieve the purpose of avoiding the risk of inflation.This article study the relation between the exchange rate fluctuations and domestic inflation risk from the following aspects. Firstly, the transmission effect of the exchange rate fluctuations and inflation risks related theories are reviewed, and use these theories to analyze the situation in the third chapter. Secondly, through the effect of exchange rate fluctuations on our analysis of the domestic price transmission mechanism is mainly based on the current exchange rate movements and changes in related indicators from the three ways to analyze how exchange rate fluctuations affect our domestic prices, and finally, principal factor analysis on the pathway classification of the relevant factors, the empirical results to construct the final risk assessment system.The purpose of this study is to construct risk assessment through the system, obtained in the course of the exchange rate of conduction in all the domestic price level of the number of factors, and has some understanding, based on the results of the economic life in the future to take appropriate measures to avoid the risk of domestically generated inflation.