Interactive Relationship Between The RMB Exchange Rate And Real Estate Prices

Following the RMB exchange reform in 2005,the central bank implemented an important reform of the RMB exchange rate in August 2015.This reform has taken a series of measures to make the flexibility of the exchange rate more flexible than that of the exchange reform in 2005.After the exchange rate reform,the central bank experienced a rapid depreciation.In order to maintain the relative stability of the RMB exchange rate,the central bank strengthened its intervention in the foreign exchange market and added a countercyclical adjustment factor to the formation mechanism of the RMB exchange rate.In this way,after this round of exchange reform,China has not really shaken off the impact of long-term RMB exchange rate fluctuations on domestic money supply.In order to maintain exchange rate stability,the central bank conducts foreign exchange trading in the foreign exchange market,thus affecting the domestic market.In theory,the change in the money supply of a country will affect the asset price of the country.Therefore,many scholars at home and abroad have made a lot of research for relationship between the amount of money and the fluctuation of the stock market,and thus the relationship between exchange rate fluctuations and stock market fluctuations.But from the situation in our country,since the beginning of this century,residents' investment has turned more to the real estate market due to many problems in the stock market and the real estate market has become an important part of China's asset market.Therefore,when the RMB faced a large depreciation pressure after the exchange rate reform in 2015,there was a debate in China's theoretical circles about the exchange rate or the protection of housing prices.In particular,considering the important position of the real estate market in China's real economy and the various aspects of macroeconomic stability,what is the relationship between the RMB exchange rate and housing prices has become an important topic that we must study.The interaction between exchange rate and real estate price has important practical significance.At firstly,this paper reviews and summarizes the relevant research of the domestic and foreign on the interaction of exchange rate and real estate price.Then the paper theoretically studied the interaction of China's RMB exchange rate,money supply and realestate prices and analyzed an in-depth reflection on the intervention of money supply.In the empirical study of its interaction relationship,the overall relationship between RMB exchange rate and real estate price was first verified and then the VAR model system was used to verify the interaction between RMB exchange rate,money supply and real estate prices.We can come to a conclusion through the theoretical and empirical analysis.First,influenced by the domestic economic environment,the exchange rate will influences the real estate prices with the money supply channel and the relevant behavior of investors and respectively pass by the liquidity effects,wealth effects and spillover effects.Therefore,the China's RMB exchange rate ? money supply ? real estate prices transmission mechanism is exist.Second,although China has completed the interest rate marketization reform,there are still some aspects in the real world.For example,banks' deposit and loan interest rates still have some restrictions,which makes the impact of real estate prices on the RMB exchange rate not very significant.Therefore,China's real estate prices ? RMB exchange rate transmission mechanism is weak.The last part of this paper is conclusions and policy recommendations.According to the empirical results and the actual situation,relevant suggestions are provided for the “insure exchange rate” and “insure real estate prices”.