The Research Of The Correlation Of The Hot Money Flows And The RMB Exchange Rate Fluctuations

Since the outbreak of the financial crisis in the United States in2007, the globaleconomy has entered a recession to a slow recovery process, the international hotmoney sought a safe haven and speculative arbitrage market in the world, China hasbecome such a high mobility, highly speculative primary objective of international hotmoney inflows. But in2012, the phenomenon that the net inflow of international hotmoney has changed, which was the first large-scale outflow and massive inflow ofinternational hot money again in our country in2013.A large number of internationalhot money inflows and outflows bring China’s exchange rate and economic stability ahuge impact, seriously affect the stability of our financial system, and put forwardhigher requirements to the regulation of international hot money. Therefore, the studyof relativity of the international hot money flows and the RMB exchange ratefluctuations has important practical significance to the prevention of the risk oflarge-scale flow of international hot money and maintain the stability of the RMBexchange rate.Before the reform of the exchange rate system in2005, China has adopted a defacto fixed exchange rate regime, exchange rate fluctuations not very. Since2005,China began to implement a real managed floating exchange rate system, and theRMB exchange rate fluctuations affect the international hot money inflows andoutflows, while the international hot money flows also affect the RMB exchange ratefluctuations. Recalling estimation methods of the scale of international hot moneyflow are the direct method, the indirect method, Klein France and mixing method. Weuse the indirect method and the VAR model, taking the international hot money andthe RMB exchange rate in the range of quarterly data from2000to2012as the studysample. By the empirical studies, we find that: in the short term, to the same extent,the flow of international hot money much more affected by the RMB exchange rate,but the RMB exchange rate fluctuations less affected by international hot moneyflows, and has a lag nature, in the long term, the mutual influence of each is small.Further open capital markets, and expand the floating range of the RMB exchangerate is an inevitable trend, the international hot money on the RMB exchange ratefluctuations will also be increasing. Therefore, we need to strengthen the constructionof the financial system and the hot money regulatory system, strengthen thesupervision of the source and the flow of international hot money channels, strengthenthe coordination of the domestic hot money regulatory agency and internationalcooperation and other measures which in order to strengthen the international hotmoney flows monitoring to reduce international hot money RMB exchange ratefluctuations.