Analysis On Influencing Factors Of The Exchange Rate Between Chinese Yuan(CNY) And Mongolian Togrog (MNT)

Today, around the world globalization processing is running light speed. Each countryare relating to worldwide net system, that international finance, world economy, foreign trade,global policy, foreign exchange market, stock markets and others. Specially, ForeignExchange Market is worldwide ’net’ that operates almost24hours per day because ofdifferent time zones. This is so much the case in the present environment of financialderegulation and globalization of financial markets.Whereas, China is main role of global economy all over the world, I analyzed themacroeconomic factors of exchange rate between CNY and MNT in Mongolia. China isdominant role of Mongolian market and the one of two neighbor countries. So as this study isvery important significance of two countries.The main variables used to check variability are: inflation, interest rate, exports to Chinaand imports from China on exchange rate between CNY and MNT. The monthly data for theperiod between2006and2012was used. It was taken from Monthly Statistical Bulletin ofBOM, Monthly Statistical Bulletin of NSO and Monthly Report of MGCA.In the analysis, I used simple linear regression model with ordinary least method. Theresults of our study revealed that the inflation and interest rate are the two most influentialfactors to exchange rate variation, but exports and imports between China and Mongolia haveno significant effect on exchange rate. All of result came from co-integration regression testas well as correlation and covariance measurement, that all was analyzed by Eviews7.Organization of this study is included seven chapters. Each chapter is very importantcharacter of my dissertation’s objectives. My study consists of chapters as follows:CHAPTER ONE INTRODUCTION: It included back round to study, problem statement:reasons of why this statement is important, objectives, research questions, significance of thestudy, scope and limitation of study and finally, literature reviews.CHAPTER TWO MONGOLIAN OUTLINE: This is about country of Mongolia,geography and climate, history, political system, foreign relations of Mongolia, population,language, religion and currency.CHAPTER TREE MONGOLIAN ECONOMY AND EXCHANGE MARKET: It can show Mongolian economic reports, brief history of Mongolian economy, economicrelationship between China and Mongolia, bank system of Mongolia and finally, organizationof Mongolian exchange market.CHAPTER FOUR THEORITICAL FRAMEWORK ‘FLUCTUATING PRINCIPLESOF EXCHANGE RATE’: This chapter provides several macroeconomic influencing factorsand their effect and relative with foreign exchange rate. Fluctuating principles of foreignexchange rate are; FOREX, monetary policy, inflation, interest rate, trade balance, GDP, FDI,supply and demand and finally PPP. In this thesis, I explained theories of most importantseveral variables of foreign exchange rate. Economists will have been studying influencingfactors of exchange rate for future.CHAPTER FIVE MODEL AND DATA ANALYSIS: In this chapter, I analyzed to showdata analysis of exchange rate and selected influencing factors, these are: inflation, interestrate, export to China, import from China, FDI from China and monetary policy. All of data iscollected monthly statistical and formal reports between January,2006and December,2012. Istudy graphic and report analysis of all variables in same time period.CHAPTER SIX RESULT AND DISCUSSION: In this chapter, I analyzed and discussedempirical result. All data analysis are included84observations for monthly reports ofexchange rate, inflation, interest rate, export to China and import from China in the periodfrom January,2006to December,2012. I measured all my data collection by EViews7whichis an econometrics and statistical program for Windows. I selected two differentmeasurements for my data: Data analysis I: Covariance and correlation measurement, it canshow result and discussion of how much relate between each factor. Data analysis II: Co-integration regression test, it is estimated using simple linear regression model, and obtaineddetailed results of econometrics analysis for all data. It can show which influencing factor ismost significant to exchange rate between CNY and MNT.CHAPTER SEVEN CONCLUSSION: In this chapter, I’ll present which variables mostimportant and why some variables are not significant for influencing factors of exchange ratebetween CNY and MNT. I’ll answer research questions and will satisfy all hypothesizes.Also I’ll have found recommendation and offer conclusions from the data analysis formonetary and exchange rate policy.