The Research Of RMB Real Effective Exchange Rate And Japan And South Korea Exchange Rates’ Conduction Effect

The 21 st century, for China, is the most important period in economic development. As the change of both the economic and political situation of the world, the economic relationships between China, Japan and South Korea also have great changes. Look from the total amount, total trade volume between China, South Korea and Japan are larger. For China, Japan and South Korea is the first and second import and export trade country in East Asia. For South Korean, China and Japan are the first three countries in the import and export trade. And for Japan China and South Korea also are the first three countries in import and export trade. In recent years, because of the China-Japan political relationship, lead to trade relations between China and Japan have to slide, and the trade relations to China and South Korea is increasingly close, China and South Korea trade quantity also gradually to increase, and even have to catch up with the trend of the trade between China and Japan. Changes have taken place in the volume of trade is not only in China, South Korea and Japan. China, South Korea and Japan’s currencies in recent years are also fluctuated. Especially in the past two years, the exchange rate between China and Japan and China and South Korea are large fluctuations, and some scholars research it is concluded that it is precisely because the exchange rate fluctuations, make China and Japan, China and South Korea‘s trades a big changes. In the face of such forms of currency fluctuations, in the study of China,Japan and South Korea’s conduction of exchange rate is valuable.According to the theory of exchange rate determination and exchange rate conduction, this paper analyzes the reason of exchange rate volatility and the feasibility of exchange rate conduction. Then, according to the results of the existing researches, this paper analyzes the applicability of establishing a BEKK-GARCH model to research the exchange rate volatility-conduction. Finally, according to the real effective exchange rate sequences of China, Japan and South Korea, this paper establishes BEKK-GARCH models to the empirical research, and from the macro and micro, respectively analyzes the exchange rate volatility-conduction effect of China, Japan, and South Korea. Conclusions show that the present situation of the economy will lead the exchange rate appearing different volatility-conduction effects, and the different conduction effects will impact the economy. Through the exchange rate conduction models of China, Japan and South Korea, we can see that the volatility-conduction ways of 13 th industries and the all industry are not completely same, and the ways of every industry are also completely same. Because of this different, foreign trade participants in different industry can make the most suited measures of foreign trade risks based on the different volatility-conduction ways.