An Empirical Research On The Relationship Between Expected RMB Exchange Rate And Short-term International Capital Flows

In recent years,with the deepening of economic and financial cooperation among various countries,the large-scale flow of short-term international capital among countries has become increasingly frequent.Especially with the rapid development of Internet finance,the impact of cross-border capital flows on the economic development of various countries has been continuously deepened.Short-term international capital flows have become a non-negligible part of countries in formulating economic policies.In addition,with the large-scale flow of short-term international capital,the fluctuation of the expected RMB exchange rate also increased.Studying the interaction between expected RMB exchange rate and short-term international capital flow will help us understand the mechanism of interaction between expected RMB exchange rate and short-term international capital flows,thus providing a basis for China to prevent short-term international capital flows and exchange rate fluctuations.As the expected exchange rate can affect the short-term international capital flow directly and can also affect the short-term international capital flow indirectly by affecting the asset price,this article will include the stock price in the framework of expected RMB exchange rate and short-term international capital flows to study the interaction of expected RMB exchange rate and short-term international capital flows.This article first explains the relationship between RMB exchange rate expectation and short-term international capital flow in theory and analyzes the fluctuation of the two.Then based on the results of theoretical analysis,the three variables of RMB one-year NDF,short-term international capital flow and Shanghai Composite Index were selected to establish the MSVAR model for empirical analysis.The results of the study indicate that,in addition to being able to directly affect short-term international capital flows,expected RMB exchange rate can also indirectly affect short-term international capital flows through stock prices.There is an asymmetry in the interaction between the expected RMB exchange rate and short-term international capital flows.In the event of major economic and financial events,the impact of RMB exchange rate expectations on share prices and short-term international capital flows will change.Based on the conclusions of this article and the actual situation in China,this paper suggests that China should improve the early warning mechanism for short-term international capital flows,optimize the structure of investors in China's stock market and strengthen the management of RMB exchange rate expectations in order to strengthen China's ability to resist sudden economic crisis.