A Research On The Relationship Between The Fluctuation Of RMB Exchange Rate And China Short-term Capital Flow

Since August 2015,the exchange rate of RMB/USD price quotation becoming further better,due to comprehensive consideration of the foreign exchange market supply and demand relations and other major international currency exchange rate changes.The situation of the whole world economy is in a downturn,the reverse globalization and trade protectionism has a rise trend.However,China has maintained a relatively high economic growth speed,and it made great contributions to the development of world economy.The exchange rate is a key variable in international finance,and as a benchmark price parameter,the fluctuation of the exchange rate has an effect on the short-term capital flow and long-term capital flow.Short-term capital flow has the characteristics of destructive,speculative motive of capital flows have potential threat on China's economy.So it has a strong theoretical and practical significance to have a research on the relationship between the fluctuation of RMB exchange rate and China short-term capital flow.In the introduction part,this paper did a study on related literature at home and abroad,including the latest research literature abroad,and vast domestic research literature which has been classified.In the theoretical analysis part,this paper introduces the definition and classification of the exchange rate,the definition and characteristics of short-term capital flows,exchange rate determination theory and capital flow related theory.It has an analysis on exchange rate determination theory and capital flows related theory,then it analyzed the interaction mechanism of the RMB exchange rate fluctuations and short-term capital flows.In the quantitative research part,it carried on the statistical description on the RMB exchange rate and short-term capital flow separately then do a statistical description on both.In the empirical research part,a VAR model is used for empirical analysis on the basis of theoretical analysis.It select four variables:RMB exchange rate,short-term capital flow,the interest margin between China and USA,and China's GDP growth rate,use sample of quarterly data from 2008 to 2016.It use several test methods including:ADF unit root test,Johansen cointegration test,Granger causality test,impulse response analysis and variance decomposition analysis.Then,It make a summary on the bases of the empirical results.In the past two years,there were mass flow of short-term capital which were under control,the expectations of the RMB exchange rate has depreciated which is relatively stable on the whole.We should make the construction of our financial system more perfect,strengthen the supervision of short-term capital flow,promote the reform of RMB exchange rate mechanism steadily.