The Study On Effect Of Short-Term Cross-Border Capital Flows On Fluctuations Of The RMB Exchange Rate

Since the beginning of the US financial crisis,global capital flows have become more frequent,while the volatility and volatility of capital flows have also increased significantly,and factors of international capital uncertainty have increased.By manipulating capital to diversify domestic economic and financial crises and transferring risks to emerging economies,the economy of some emerging economies has been hit,the exchange rate system has collapsed,and internal contradictions in some countries have deepened and intensified.But at the same time,some developing countries are taking advantage of the opportunities of international capital power transfer to vigorously develop their economic strength.Therefore,the international capital flow after the crisis not only involves risks and crises,but also contains wealth and opportunities.Strengthening the research on cross-border capital flows in China has very important theoretical and practical significance.Since 2008,the scale of China's cross-border capital flows has increased and the changes have become more frequent.There have been two major fluctuations in China's cross-border capital flows,namely the massive outflow of cross-border capital during the global financial crisis in 2008 and the larger capital outflows from 2014 to 2017.The capital outflow in 2008 was mainly caused by the global market panic caused by the US financial crisis and the self-rescue actions of developed economies.The capital outflow from 2014 to 2017 was mainly due to the Fed withdrawing from quantitative easing and entering the interest rate channel and deepening economic transformation in China.And the "pain" caused by financial reform.In the past decade,China has also implemented two important reforms of the RMB exchange rate system.The previous reforms started in 2005 were suspended due to the arrival of the financial crisis.The reforms were initiated again in the second half of 2010.The main task was to explore the establishment of a managed floating exchange rate regime with reference to a basket of currencies.The new round of RMB exchange rate system reform since 2015 is mainly to introduce a new RMB mid-price formation mechanism and introduce counter-cyclic factor adjustment.The phenomenon corresponding to changes in cross-border capital flows is that the RMB exchange rate also exhibits associated volatility characteristics,especially the cross-border capital outflow between 2014 and 2017 and the rise of the US dollar against the RMB exchange rate.With the gradual opening of China's capital account and the continuous reform of the RMB exchange rate system,the impact of cross-border capital flows on the RMB exchange rate is gradually deepening.Cross-border capital flows have activated the development of domestic economy and technology,but at the same time brought more complicated changes to domestic financial markets.This paper focuses on the impact of cross-border capital flows on China's RMB exchange rate fluctuations,and clarifies the extent and transmission mechanism of cross-border capital flows on the RMB exchange rate from the perspectives of qualitative analysis and empirical analysis.This paper believes that the important transmission mechanisms are interest rate transmission,inflation transmission,exchange rate expected transmission and international balance of payments.This paper believes that the important transmission mechanism of cross-border capital flows to the RMB exchange rate mainly includes interest rate transmission,inflation transmission,exchange rate expected transmission and balance of payments.Through the VAR model to verify the impact of Sino-US interest spreads,relative inflation levels,RMB exchange rate expectations NDF,and cross-border capital flows on RMB exchange rate fluctuations,the results show that there is a significant negative relationship between cross-border capital flows and RMB exchange rate fluctuations.The Sino-US spread channel exists but the transmission effect is poor;the RMB exchange rate is over-adjusted under the relative inflation transmission channel;the RMB exchange rate expected transmission channel has a greater impact on the RMB exchange rate fluctuation,and its pulse effect is close to the cross-border capital flow The impact of the RMB exchange rate;overall,cross-border capital flows and exchange rate expectations are the main explanatory variables for RMB exchange rate fluctuations.Based on the above research conclusions,this paper suggests that supervisory authorities should optimize the monitoring methods of cross-border capital flows and strengthen the ability of the RMB exchange rate to cope with market shocks from the perspective of capital flows.Deepen the reform of interest rate marketization,highlight the basic role of interest rates in the price mechanism,and improve the efficiency and effectiveness of the interest rate transmission mechanism.Focusing on the linkage effect between the capital account opening process and the RMB exchange rate reform,in the context of the gradual opening of the capital account,more temporary capital control measures are adopted to strengthen the supervision of short-term capital flows;more emphasis is placed on using offshore market information to predict cross-border Capital flows and fluctuations in the RMB exchange rate strengthen the management of the expected exchange rate of the RMB;strengthen the prevention of RMB exchange rate risks to ensure the stability of the RMB exchange rate.