Empirical Research Of The Relationship Between RMB Interest And Exchange Rate

Essentially, interest rate and exchange rate respect are the core of the financialsignal of macro economic operation, but also the important tool to implementmonetary policies, regulate monetary market and foreign exchange market．Therefore,thetransmission mechanism of RMB exchange rate and interest rates，and coordinating theirexchange rate policy and interest rate policy,has important theoretical and practicalsignificance for the maintenance of our national financial stability and promoting reformof the financial market and achieve internal and external equilibrium of our economy．Firstly,the paper studys the classical model of the relationship between exchangerate and interest rate， and then combined with the our country Economic reality,separately from multiple aspects the RMB exchange rate and interest rate of theinteractive relationship between transmission route. In the empirical test, this paper useADF test, cointegration test, granger causality test to analyze the long-term equilibriumrelationship and mutual influence between the RMB exchange rate and interest rate. Theempirical results show that the long-term interest rates and the RMB exchange ratemovements are positively correlated，but the effect is weak. interest rate compared to theinfluence of interest rate on the influence of the exchange rate is more obvious. Finallybased on the theoretical analysis and the empirical results, the paper presents the advanceof capital accountliberalization，reform of exchange rate formation mechanism,improvethe interest rate market and so on．...