The Influence Factors Of RMB Exchange Rate Fluctuation Research

Since the People’s Bank of China announced the reform of the exchange rate regime on July21,005, the value of the exchange rate of the RMB against the U.S. dollar advances slightly, steadily and gradually, and the exchange rate system is no longer pegged to the dollar, but a based on market supply and demand, reference to aA basket o currencies, the managed floating exchange rate system. As the volatility of RMB exchange rate gradually expanded, the question of the RMB appreciation has already become a hot spot around in enterprises, government and academic circles. So it is necessary to analyze and research the influence factors of the exchange rate of the RMB against the U.S. dollar detailly.There are many factors influcing exchange rates.In addition to the international factors, the other factors cause the appreciation of the RMB including economic growth, capital flows, price and monetary policy. At the time, to avoid the impact of China’s exports and economic growth due to the continued appreciation of the exchange rate, he monetary authorities have taken irregular foreign exchange market intervention, they buy and sell foreign exchange in order to stabilize exchange rate or make the exchange rate to meet the government’s intention. The paper will reveal the various economic variables’varying degrees of impact on the exchange rate through the analysis of the impact of the exchange rate factors. If s of great significance to judge whether the RMB will continue to appreciate, whether the RMB exchange rate will tend to be balanced level, how the central bank will intervene and how to implement monetary policy. It will provide sufficient theoretical basis and pertinent policy thinking to the government’s macroeconomic regulation and control.The paper based on the flexible price monetary theory and the exchange rate generated microstructure model, we use data from January1995to December2012to construct a linear regression model including the RMB exchange rate, China-US interest rate differential, China and the Unit States money supply difference, the actual income difference, the central bank intervention and the difference between exchange rate equilibrium value and the exchange rate, meanwhile, applied EARCH process to measure the asymmetrical impact of market information on the exchange rate fluctuations.. The paper is structured as follows:the first part is an introduction, mainly deal with a writing background, significance; The second part is the RMB exchange fluctuations influencing factors; The third part is a theoretical analysis model; The fourth part is the setup of the influence factors of China’s RMB exchange rate volatility model, including data selection, testing and the analysis of the model’s estimation results. The fifth part is the conclusions、policy recommendations and innovation of this paper.The conclusions of the article are as follows:The long-term stable development of China’s economy is the essential cause of the appreciation of the RMB, the RMB exchange rate formation mechanism reform is the institutional factors of the fluctuation of exchange rate, balance of payments, foreign exchange reserves and expected factors also have an important on the volatility of exchange rate. The results show that the interest rate, monetary supply, real income, the central bank’s foreign exchange intervention will produce significant influence to the exchange rate, but the degree which affects is different. The RMB exchange rate will remain relatively stability, the RMB appreciation and depreciation range will not be more than expected.Along with the gradual appreciation of the yuan, China’s central bank should continue to steadily promote the reform of RMB exchange rate formation mechanism, upholding the principle of "intiative"、"progressive" and "control", taking the initiative to choose the timing of the exchange rate regulation and amplitude, then the RMB exchange rate will gradually move closer to equilibrium level.