Study On Relation Of China’s Forward Exchange Rate And Spot Exchange Rate

In recent years, the transactions of RMB and foreign exchange is quite active, theexchange rates of the RMB to the dollar, euro and yen exist greater changes. There isno doubt of the existence of the exchange rate risk in our country. And the forwardrate is the derivatives tool, which is used frequently to avoid the risks of foreignexchange. How is the applicability of Interest rate parity theory in our country in ourcountry, this is also the focus of research in this paper. In other words, the focus ofthis paper is to research the relationship between the spot rate and the forward ratebased on the theoretical of interest rate parity.This paper analyses the relation of the forward rate and the spot rate of us dollar,the euro and yen to the RMB. The empirical analysis is based on two theories. In thepart of empirical analysis, I made the unit root stationarity test and cointegration test.Then I explained the results of the empirical analysis. From the final analysis, we canfind that the core problem of our country’s forward rates market is the capital marketis not open wildly and the marketing level of interest rate is very low. China shouldcontinue to promote the formation mechanism of RMB exchange rate and speed upthe pace of market-oriented interest rate reform. China should solve the separationproblem between the shore and offshore finance and increase the market participationto make the forward rate market actively.