Study Of RMB Offshore And Onshore Market Exchange Rate

Since China carried out the cross-border RMB trade settlement pilot in September2009, established the HongKong offshore RMB market in August2010and established Shanghai Free Trade Zone in September2013, the internationalization of RMB process has adopted a significant progress after Chinese government made a series of positive measures. Among them, the construction of the RMB offshore market has played an important role for promoting the internationalization of the RMB. The study of onshore and offshore RMB market exchange rate linkage has also become a hot research topic.Currently the world’s leading offshore RMB markets are Hong Kong, Singapore, London these three RMB offshore markets. This article starts from the description of relative concepts, types and characteristics of the offshore financial markets, and then through the qualitative analysis of RMB offshore market and the onshore market combining with corresponding empirical analysis, it shows the linkage relationship between offshore RMB market and the onshore market. Empirical analysis is the highlight of this article, and this article has a two-stage analysis from July,2009to the time HongKong offshore RMB market established and since then to now. Measurement methods used are the stationary test, cointegration test and Granger causality test. It shows that NDF market is in the information center of the foreign exchange market and plays a guiding role on the onshore and offshore RMB market. HongKong deliverable forward market is also has a strong guiding effect on the domestic RMB forward market.For the above situation and existing problems, the article mainly puts forward four suggestions:Widening RMB investment channels, diversifying RMB returning channels, strengthening cross-strait financial supervision cooperation and improving financial laws and regulation. These four suggestions can help maintain the stability of the financial market and ensure the healthy and orderly development of offshore financial markets in different ways. In addition, deepening the financial reform is a long-term policy that is needed to carry out and further promoting the RMB interest rate and exchange rate marketization. Marketization of interest and exchange rates is mutually coordinating and promoting, which can better reflect the demand and supply for RMB and effectively prevent arbitrage activities in the market.