The Influences Of The Fed’s Quantitative Easing Monetary Policy On RMB Exchange Rate

In the context of the financial crisis, the United States innovated the monetary policy tools, and took four quantitative easing monetary policy, trying to stabilize its financial system and support economic recovery. In the background of the traditional monetary policy failure, the Fed forced to innovate the monetary policy tools and took the monetary policy of quantitative easing to put hundreds of millions of dollars into the markets. Since November 2008, the Fed has took the four round quantitative easing monetary policy.Under the condition of open economy, based on the US’s powerful international influence, the US monetary policy not only serves its economy, but also affects the global economy. For China, the Fed quantitative easing monetary policy influence our country’s economy through trade, interest rates, capital flows, exchange rate, inflation and other channels. The most obvious is that, the RMB exchange rate had to rise with each round of the implementation of quantitative easing monetary policy. As one of the most important aspects of the national macroeconomic control, Sharp fluctuations in the exchange rate is obviously unfavorable for the sustainable development of economy in china. But the RMB exchange rate appreciation is really related to the US’s unconventional monetary policy? In recent years, the RMB exchange rate fluctuations are related to the Fed’s quantitative easing monetary policy? In order to understand the impact of the Fed’s quantitative easing monetary policy on the exchange rate of RMB, this paper first combed the related literature at home and abroad, it was found that the foreign and domestic research focuses more on the quantitative easing monetary policy for China’s inflation rate, output level, the money supply, the influence of capital flows, and there are less articles studying on the influence of RMB exchange and most of them focused on the theoretical analysis, lacking of further quantitative statistical analysis. So it appears very necessary from the theory and empirical analysis to research on relationship between the Fed’s quantitative easing monetary policy and the RMB exchange rate.In view of this, this paper adopts the method of combining theoretical analysis and empirical test. We choose the data of November 2008 to October 2014 to set up a SVAR model and use impulse response function and variance decomposition to analysis to measure the Fed’s quantitative easing monetary policy impact on the direction and extent of the RMB exchange rate and make up for the lack of the econometric model of the impact of policies on the RMB exchange rate under the background of financial crisis. The empirical result shows that the Fed’s quantitative easing monetary policy does not make great contributions to the exchange rate appreciation of the RMB, the level of output,interest rates and the RMB exchange rate itself are the important factor of the RMB exchange rate level.Finally, according to the actual situation in China and based on the final conclusion, we puts forward relevant policy suggestions.