A Study Of Price Guiding Among RMB Onshore And Offshore Foreign Exchange Markets

Recently, the reform of RMB exchange rate mechanism continues to make breakthroughs. Along with the establishment of Hong Kong offshore RMB centre, the trading types of RMB becomes richer and the trading scale is larger and larger. Under the new situation, it has important meanings to analyze the interaction and correlation among the onshore and offshore exchange markets of RMB. This essay takes onshore spot rate, onshore forward rate, NDF rate, offshore spot rate and offshore delivery forward rate of Yuan into consider, and thoroughly analyze the relationship among RMB onshore and offshore foreign exchange markets on the basis of the existing literatures.Setting the theoretical foundation by the foreign exchange market validity and interest rate parity theory, the essay discusses the mechanism and influencing factors about the price guide among foreign exchange markets, introduces the general situation of RMB exchange markets and analyzes the price leading relation among these markets combining the above theories. Then, the essay explains the methods that evaluate the price guide among foreign exchange markets, and applies various quantitative models to analyze the price guiding relationship among the onshore and offshore markets of RMB. Finally, it concludes that the price guiding power of NDF market is the most prominent, onshore spot market takes the second place, which is followed by onshore forward market and offshore delivery forward market. The guiding power of offshore spot market is the weakest among five markets. Therefore, the issue, about how to enhance the influence and local advantage of the onshore exchange markets, is the problem that our country has to resolve in the future.