Analysis Of The Interaction Between Offshore And Onshore RMB Exchange Rate

The process of internationalization of the RMB faces many challenges.From the experience of internationalization OF the Dollar,the Yen and other currencies,a sustainable and healthy developing offshore market which also maintains a good interaction with the onshore market plays a very important role in improving the degree of international acceptability of a country's currency.Studying on the interactive relationship between Offshore and Onshore RMB exchange rate,Helps to grasp the inherent mechanism and conduction effect between them,and then contributes to the coordinated development of RMB Offshore and onshore market;On the other hand,it also helps for us to grasp the trend of cross-border RMB capital flows and analyze the flow patterns,preventing from the potential financial risks.Moreover,it helps dealing with the new situation after the RMB into the SDR,guiding the development of the RMB Offshore market and promoting the process of internationalization of the RMB.Last but not least,it is good for promoting the marketization of the exchange rate and the reforms of RMB capital account convertibility,and advancing the comprehensive and deepening of reform in the financial sector.In this paper,we analyze the relationship between the RMB Offshore and onshore market from the aspects of practice and empirical research and proposed some recommendations in promoting the coordinated development of the RMB Offshore and onshore market.From the aspect of the practical research,we focus on the analysis of the internal mechanism and market performance between the RMB Offshore and onshore market.From the aspect of the empirical research,we select the CNY,CNH,NDF spot data before and after the exchange reform of 2015 "811".By constructing the VAR model,using ADF unit root test,co-integration test and Grainger causality test,we analyze the balance and their guiding relationship.Finally,this paper points out that,in order to promote the internationalization of RMB,we need to take positive respond to the new situation after the RMB into the SDR and maintain a stable and orderly development of the exchange rate system,accelerating the development of the offshore RMB market.