Analyse The Effect Of Real Effective Exchange Rate Fluctuation On Currency Internationalization

In 2007,the financial crisis swept the world,and the United States dollar as the single core international monetary system exposed serious exposure.Therefore,to promote the formation of a diversified international monetary system has become a widespread consensus.In 2009,the pilot work on cross-border trade settlement of RMB was first launched in Shanghai and Shenzhen,which marked the formal departure of the process of internationalization of RMB.In 2015,the International Monetary Fund formally announced that the RMB would be allowed to join the SDR(Special Drawing Rights),and the RMB would become the fifth SDR basket currency tied to the dollar,the euro,the pound and the Japanese yen,which meant that the process of internationalization of the RMB would have achieved a phased result.Although RMB internationalization has been developing rapidly in recent years,it does not mean that RMB has the strength to act as an international currency.In 1990,the yen in the international financial market only acted as the "carrier currency"of the arbitrage trade,and did not play the role of international currency,which led to the final Epiphyllum of the internationalization of the yen,which has rounded the alarm of the process of internationalization of the RMB.Since 2015,China’s domestic economy is facing a downward pressure.The GDP growth rate has dropped to 6.9%,the total export volume has decreased by 1.8%,and the RMB exchange rate has fallen by 5.8%over the whole year.At the same time,the recovery of the world economy is sluggish,plus the US entering a new round of interest rate raising cycles,resulting in a large number of capital escaping from China and returning to the US.Under the dual pressure of domestic and foreign economic forms,it is very important to reanalyze the potential real driving factors of RMB internationalization and to examine the new risks and challenges facing the internationalization of RMB under the "new normal" economy.This paper derives the overseas demand function of money,which is the theoretical basis for the study of the influence factors of the internationalization of RMB by the induction of the theory of domestic demand based on the small country’s closed economy.And this paper uses the GARCH model to calculate the fluctuation degree of the real effective exchange rate of RMB,and to calculate the latest RMB overseas stock by deducting local demand method.Finally,based on the structure vector autoregressive model,the relationship between the three parties of foreign trade,financial market and exchange rate fluctuation and RMB internationalization is analyzed.The following conclusions are drawn:(1)since the key period of China’s economic structural adjustment,the overseas stock of RMB has fallen into a large scale,and the process of RMB internationalization has been severely hindered.(2)the promotion of foreign trade scale and the strengthening of China’s trade competitive advantage have a positive promotion to the internationalization of RMB.But the effect is limited to the strong use of the US dollar,the two is short,and(3)the scale of the circulation of the financial market and the increase of the yield of the securities investment have a negative effect on the internationalization of RMB.The reason is that the Chinese financial market is not perfect,and the capital accounts are not fully convertible,so the market is not fully convertible.Therefore,the market is not fully convertible,so the market is not fully convertible.The promotion of activity can not attract a large number of overseas investors,but on the contrary,the local capital is"deactivated",which hinders China’s real economic shift and upgrading,thus restraining the development of RMB internationalization;(4)the exchange rate devaluation and exchange rate fluctuations have a long period of inhibition on the level of RMB internationalization,because the depreciation of the exchange rate is seriously exploited.The weak foreign non residents hold the confidence of the RMB,and the exchange rate fluctuations increase the risk of the renminbi holders.At the same time,this shows the rapid development of the RMB internationalization in 2009～2014.The key driving factor behind the RMB appreciation is the appreciation of the RMB exchange rate and the expectation of appreciation.