The Impact Of Exchange Rate Translation On The Financing Capability Of Foreign Operators In China

The central bank announced that China will enter a managed and floating exchange rate period on July 21st 2005. It means that the volatility of RMB exchange rate will fluctuate more. With the progress of China’s "going out" strategy, more and more companies participate in the international competition which finally become the overseas business companies. The exchange rate volatility will undoubtedly have a huge impact on overseas business companies when they toward the international market. However, how to guard against exchange rate risk has become the focus of scholars’ attention. Especially, figuring out the impact of the RMB exchange rate volatility to overseas business companies in China has an important significance for the prevention of the exchange rate risk.The focus of this paper is that how the RMB exchange rate have an impact on overseas business companies’financing capacity. In this paper, a combination of theoretical analysis and empirical analysis conducted in-depth research of the relationship between the RMB exchange rate fluctuation and the financing capacity of overseas business companies. Firstly, this paper theoretically analyzes the way of the RMB exchange rate volatility to impact the financing capacity of overseas business companies. Secondly, this paper establish the equation under some certain assumptions, and use mathematical models to deduce the impact of the RMB exchange rate volatility on overseas business companies’ financing capacity. Next, this paper select the sample data of manufacturing in 2008-2014, use generalized linear model to quantitatively study the impact of the RMB exchange rate volatility on overseas business companies’ financing capacity. Finally, based on the theoretical analysis and empirical analysis results, this paper summary the conclusions of the article and put forward corresponding enlightenment.