From The Standpoint Of The Rmb Ndf Rate Measurement And Its Economic Effect Of The Appreciation Of The Renminbi Is Expected

Since the exchange rate formation mechanism reformation from July21,2005,the fluctuations of CNY SPOT exchange rate increases, businesses and residentsface exchange rate risks. In the forward market, hedging is a common way toavoid exchange rate risk. Current products in the market to operate RMB forward areseparated into two main types, one is the offshore NDF market, and the other isthe domestic forward foreign exchange market, which including inter-bank forwardmarket and forward foreign exchange market. This essay examines thecointegration relations between the rate on the offshore NDF market andthe spot exchange rate on the foreign exchange market, and the effectiveness of twotypes of forward foreign exchange market. Market exchange rate for the timeseries of Granger causality test shows that the RMB NDF market is the informationcenter of foreign exchange market. Then the paper empirically estimates theexpectation of RMB appreciation while analyzing its economic effects by usingGranger Causality Test and Correlations Analysis based on the related monthly data. Itshows that the negative impacts is mainly to finance, such as attracting internationalspeculative capital inflows; accelerating the accumulation of foreign exchangereserves; increasing excess liquidity and the pressure of sterilization; propelling stockprice and so on. It does not affect the price of general commodities and real estate butpromote economic growth indirectly. To some extent, it also inhibits the growth oftrade surplus which helps to ease the internal and external disequilibrium.