Research On The Influence Of China’s Capital Accounts On RMB Real Effective Exchange Rate Based On The Partial Opening

With the deepening of economic globalization, China’s capital account opening has become an inevitable trend in the area of financial reform. Since the current account opening in 1996, the international trade of China increased year by year, the structure improved constantly. Furthermore, the regulation of capital moving cross-border become opened gradually and economy grow strongly. Foreign trade and expanding capital flows have a huge impact on the system of Chinese capital control. The objective conditions of China’s capital account opening become mature. In particular, the RMB is included by IMF Special Drawing Rights(SDR) basket of currencies in December 2015, the RMB was added in SDR increase the degree of capital account opening and speed up the process of opening.However, in the process of capital account opening, some countries have kept the stability of exchange rate and have promoted economic development, and some have the exchange rate and local economy suffered great concussion. According to this, capital account liberalization and exchange rate complement each other, a stable exchange rate creates a good external environment for opening and the large capital flows caused by the gradual opening of the capital account also changes the exchange rate, leading to appreciation or depreciation of the exchange rate. Therefore, in the process of promoting capital account liberalization, we must grasp the relationship between liberalization and the exchange rate, maintain stability of the exchange rate and achieve the ultimate goal of capital account opening.The dissertation discusses the impact of capital account on RMB real effective exchange rate. Firstly, this dissertation starts from the introduction of some basic instance of our country capital account opening and the RMB real effective exchange rate, then introduces the process of China’s capital account liberalization and the current situation of the partial opening and analyzes the situation of RMB real effective rate in various historical periods. Secondly, this paper introduces the theoretical basis of the influence of capital accounts on the exchange rate. Thirdly, the author divides the capital account intotwo parts: direct investment and non-direct investment. And the author used the qualitative analysis method to analyze the impact of capital account to the rate of exchange. Fourthly,this paper is based on the behavioral equilibrium exchange rate model and VAR、VEC method, it analyzes the relationship between the capital account and RMB real effective exchange rate from an empirical view. The study shows that there is a significant correlation between China’s capital account and RMB real effective exchange rate, the increase of the number of FDI and NFDI will lead to the appreciation of RMB. Finally, the author combined the relationship between capital account and RMB real effective exchange rate, put forward some policy suggestions of promoting the process of capital accounts opening in our country and the reform of the rate of exchange system.