Study On The Impact Of Short-Term International Capital Flows On The Exchange Rate

In the process of accelerating the internationalization of China's RMB,although current projects have been opened to the outside world,capital projects are still under control.On the one hand,because capital flows have the characteristics of profitability,in some extent,it encourage short-term international capital to enter China through various channels,and it will be more difficult to statistic and supervise the short-term international capital.At the same time,it will also have a complex impact on foreign exchange markets,capital markets and commodity markets.On the other hand,with the development of economy,China encourages the policy of foreign direct investment,optimizes the structure of the economic industry,and promotes the rapid growth of the real economy.At the same time,the large-scale movement of short-term capital also causes turmoil in foreign exchange market,stock market,which seriously jeopardizes the stable development of the economy.Since 2014,the large-scale outflow of short-term international capital in China has not only impacted the foreign exchange market,but also hindered the stable and healthy economic development.This has brought great challenges to the monetary authorities in maintaining the stability of the exchange rate.Therefore,it is of great economic and practical significance to study the impact of short-term capital flows on exchange rates.This article first analyzes the current situation of the short-term capital flow and RMB exchange rate,qualitatively analyzes the impact of short-term international capital flows on exchange rates,and establishes a VAR model to quantitatively study the impact of short-term capital flows on exchange rates.Including direct and indirect channels,the indirect effects are mainly described in terms of China-U.S.spreads,relative inflation,and central bank foreign exchange intervention.Based on the Granger causality test,pulse function and variance results,providing reference and suggestions for the relevant departments to deal with the impact of short-term capital flows on the exchange rate.