Research On RMB Exchange Rate - Interest Rate Interaction Mechanism In The Process Of Marketization

Interest rate is an important indicator of the market economy and a significant mark for each market participant in the cost of the main use of funds, and the various aspects of the entire market has produced a vital role. Exchange rate is the core variable in the foreign exchange market formed under open conditions, to be affected by,such as, the international balance of payments, foreign exchange market, foreign exchange reserves and asset portfolio. When the currency as an asset, the interest rate can be considered as the capital price in the domestic money market, while exchange rate is a price in the international market, both have a concordant value basis and are coterminous with each other. In an open economy, the interaction between the two economic variables--nterest rates and exchange rates affect each other, and more importantly, both of which may be influenced by more fundamental factors (such as money supply and demand, etc.), constituted a complex dynamic feedback system and interactive mechanism. However, many scholars paid less attention to interactive mechanisms of interest rates and exchange rate, and The lack of adequate understanding of the interaction mechanisms will make the lack of sufficient knowledge of the market as a whole in our grasp but missed the opportunity to gradually promote the interest rate market reform process, even lead to policy conflicts, diametrically opposed to disrupt the process of financial market reform. In all, whether there is interaction now between the RMB exchange rate and interest rates and how the interaction between policies play a role in it, how to achieve coordinated interest rate policy and exchange rate policy in the context of the presence of such interaction effects to be us further study. Through the use of modern econometric methods and large amounts of data behind, now I want to explore the link between interest rates and exchange rate.