Under The Background Of The Internationalisation Of The Renminbi Exchange Rate Trend Analysis

With world trade’s prosperity and economic globalization, the internationalfinancial market gets rapid development. In this context, the Dollar, Japanese Yen andthe Euro as international currencies face challenges from the currencies of otherunderdeveloped countries which are developing fast. Especially in the2008FinancialCrisis, the western countries suffered a severe impact, currency received a degree ofcombat, at the same time, China and other developing countries got opportunities.China after30years’s reform and opening-up, especially after the joining of WTO,has increased its economy and trade. The domestic economy developed rapidly, GDPincreased ceaselessly, and the power of nation has been strengthed rapidly. These hasprovidedre the internationalization of the RMB good economic conditions. RMB’sinternationalization will enhance our economic and financial competitiveness,meanwhile prosperfy China’s trade and financial market. Looking to the future, tomake faster development, China must follow the tide of world development and dothe internationalization of RMB.In an open economy the exchange rate is an important economic variable,making extensive and important influence and explanation for economy development.In the background of internationalization of RMB, the analysis of the exchange rate ismore meaningful. And more and more complicated and diverse factors influence theexchange rate. From experiences, the value of the currency always rise during acurrency’s internationalization process. But stable currency is a basic condition ofcurrency internationalization. Therefore, this paper will demonstrate the RMBexchange rate will rise in the same situation from an entity economy angle withBalasa-Samuelson model and its extension model.The paper consists of four parts: Part one elaborates the status of theinternationalization of RMB; Part two is a narration of the experiences of theinternational currency such as the US Dollar, Euro and Japanese Yen and draws aconclusion of the trend of RMB’s value.Part three uses empirical analysis of RMBwith Balassa-Samuelson model. Finally, the paper gives policy recommendations on the basis of the theoretical research.