The Research Of The Applicability Of Interest Rate Parity Theory In China

In 2015,the paper named "8.11"(exchange rate reform),announced by the People's Bank of China,indicating the adjustment of the renminbi against the US dollar quote price mechanism.This adjustment enables the RMB-US dollar exchange rate mechanism to be further marketized,and the exchange rate can more realistically reflect the relationship between supply and demand in the current foreign exchange market.On October 23,2015,the central bank announced the opening of a floating ceiling on the deposit interest rate.At this point,China basically completed the initial interest rate liberalization.With the reform of the interest rate market and exchange rate market,and whether the correlation between interest rate and exchange rate is higher than before,this paper will use the theory of interest rate parity to carry out statistical data analysis and empirical research.Under the background of the gradual improvement of China's financial market,studies by most domestic scholars have shown that there are great differences in the performance of interest rate parity theory in different periods in China.The applicability of the theory of financial crisis and economic fluctuation period is weak,and the applicability of financial markets is stable and has been enhanced.This paper uses a combination of statistical analysis and model checking to select the latest data from January 5,2009 to May 31,2017.The sample data amounted to more than 20,000,so the description of the variables relationship is more detailed.Descriptive statistical analysis can intuitively see the trend of data changes,at the same time model empirical analysis can describe the precise relationship between variables.The first chapter of this article mainly summarizes the background of the article,domestic and foreign literature,and the innovation and deficiency of the article.The second chapter introduces the development of the theory of interest rate parity.The third chapter is the empirical research part.As the last paragraph goes,I analize and confirm the statistical analysis and empirical test of the applicability of the interest rate parity theory in China with more than 20,000 sample data during the period.The test's results show that: after the exchange rate reform,the applicability of the interest rate parity theory in China has been significantly improved;what's more,the fourth chapter is based on empirical evidence,giving an analysis of the reasons for the low applicability of the model in China;besides,the fifth chapter of the article puts forward policy recommendations on grasping forward pricing rights,further promoting marketization of interest rates,gradual realization of exchange rate marketization,and liberalization of capital projects.