Research On The Impact Of RMB Appreciation On RMB Settlement Of Cross-border Trade

On July 21,2005, a managed floating exchange rate system which was on the basis of supply and demand and with the reference to a basket of currencies for regulation has been introduced in China, since then RMB has been in external appreciation for a long time. The middle rate of RMB against the dollar from 8.27 in 2005 to 6.12 in December 2014, for nine years the revaluation of the RMB gained 35.1%. Under the background of rising currency value, the scale of cross-border trade in RMB settlement is also growing, the RMB exchange rate has many impacts on RMB cross-border trade settlement. Not only from the perspective of maximizing the profit of the manufacturers, but also the impact of economic trade. In addition the volatility of its exchange rate will affect stability of currency value, which affects its attractiveness as a unit of account, the value of storage and international reserve currency, resulting in an increase in speculative demand for money. Cross-border trade in RMB settlement is the key point of the internationalization of the RMB.the appreciation of the RMB can bring both advantages and disadvantages to cross-border trade in RMB settlement, so it can also bring opportunities and challenges to the internationalization of RMB.On the basis of finishing summed up literature related to the relationship between cross-border trade in RMB and exchange rate, Then on the overview of the status of cross-border trade RMB settlement business as well as our exchange rate regime.we analyze theory that how exchange rate affect cross-border RMB trade settlement, the RMB appreciation will affect the import and export trade firms maximize profits, speculative motive and stable currency values.Then, based on the theory of empirical analysis, the paper uses VAR model to analyze the question that the appreciation of the RMB how to affect the cross-border trade in RMB settlement, Using granger causality test, impulse response method and variance decomposition to measure the economic significance of model. Conclusion shows that when RMB is in a state of appreciation, the use of RMB cross-border trade settlement will rise rapidly in the short term, and the effect will last for a long time, that is to say, it will start a larger increase in cross-border trade in RMB Settlement, and then gradually reduced to stable. Based on the above analysis, we should improve the RMB exchange rate formation mechanism, speed up the establishment of the RMB offshore market, promote the capital account convertibility orderly, push forward China's interest rate marketization, enhance the correlation of interest rate and exchange rate.So that it can promote the development of cross-border trade in RMB settlement and the internationalization of RMB steadily.