The Impact Of RMB Exchange Rate Changes On China's Foreign Exchange Reserves After The Economic Crisis

As important economic indicators in international finance,exchange rate and foreign exchange reserve are inextricably linked.Exchange rate fluctuations can not only change a country's foreign exchange reserves,but also be affected by foreign exchange reserves.As the world economy is increasingly closely linked,the role of exchange rate and foreign exchange reserve on national economy is increasingly prominent.The outbreak of the subprime mortgage crisis in the United States in 2007 caused a serious blow to the U.S.national economy.In order to get out of the crisis as soon as possible,the United States began to implement quantitative easing policies at the end of 2008,injecting a large amount of liquidity funds into the market,resulting in the depreciation of the US dollar and the appreciation of the RMB.China's foreign exchange reserves also began to rise.At the beginning of 2009,China's foreign exchange reserves reached US$ 2008.88 billion.In March 2011,it exceeded the $3 trillion barrier and reached a peak of US$ 399.323 billion in mid-2014.With the economy gradually improving,the continuation of quantitative easing is no longer suitable for the needs of the United States economy.At the end of 2013,the United States announced that it would start to reduce the number of US dollar bond purchases since the beginning of next year.This means that the six-year quantitative easing policy of the United States began to gradually withdraw.As the rise in interest rates began,China's foreign exchange reserves began to fall sharply after they reached their peak.In June 2015,China's foreign exchange reserves reached $3693.838 billion.It fell 299.375 billion U.S.dollars from the same period last year,7.5%in just one year,and reached 3010.517 billion U.S.dollars by the end of 2016,a decline of 24.61%compared with the highest point.From the situation of RMB exchange rate and China's foreign exchange reserves,there are many similarities between the two trends.This has caused domestic and foreign scholars to discuss the impact of RMB exchange rate on China's foreign exchange reserves.Does such a large change in the RMB exchange rate in just a few years have a serious impact on China's foreign exchange reserves?Will the RMB exchange rate affect foreign exchange reserves to the same extent during the two periods of appreciation and depreciation?In order to solve these two problems,this paper will conduct a comparative discussion in two time periods.The first time period is the period of rising foreign exchange reserves from 2009 to 2013,and the second time period is the period of falling foreign exchange reserves from 2014 to 2017.By studying the influence mechanism and risk analysis of RMB exchange rate on China's foreign exchange reserves in two periods of time,it is of great theoretical significance to make clear the correlation between exchange rate and foreign exchange reserves,enrich relevant literature at home and abroad,and provide reference for other developing countries in the world.From the perspective of practical significance,studying the impact of RMB exchange rate on foreign exchange reserves can help China resist the impact of external economic fluctuations,find out the current problems in China's foreign exchange reserve management,and improve China's economic system.Compared with the previous research results,the innovation of this paper mainly lies in the following aspects:First,enrich the relevant literature.Foreign exchange reserves are a problem that scholars at home and abroad often talk about.Many scholars have conducted extensive analysis of the factors that have led to the growth of foreign exchange reserves in China.The influence of RMB exchange rate on China's foreign exchange reserves is rarely discussed in the previous studies.Second,provide new ideas.The impact of exchange rate on foreign exchange reserves has not yet formed a unified view,and in recent years,the international economic situation has undergone new changes.Under the new situation,whether the mechanism of the RMB exchange rate on foreign exchange reserves has changed?This paper provides new ideas for analyzing the effects of exchange rate change on foreign exchange reserves.However,among the many factors that affect China's foreign exchange reserves,this paper only discusses the RMB exchange rate,which will cause the problem of incomplete analysis and is limited by the availability of data.This article uses quarterly data.There may be some deviation in the empirical results.The research methods of this paper mainly include qualitative analysis and quantitative analysis.Based on the explanation of the relevant theories of exchange rate changes affecting foreign exchange reserves,the paper introduces the changes of RMB exchange rate and foreign exchange reserves in China in recent years.It also analyzes the specific ways and risks of RMB exchange rate changes on China's foreign exchange reserves,and makes a full theoretical analysis.From the perspective of quantitative analysis,this paper uses the gradual regression method in SPSS model to study the impact of RMB exchange rate on China's foreign exchange reserves from two time periods.The RMB exchange rate is an important factor in the changes of China's foreign exchange reserves in two time periods,and the impact of RMB exchange rate on foreign exchange reserves in the second time period is significantly enhanced.Therefore,when the foreign exchange reserves fall,we should pay more attention to the impact of the RMB exchange rate,adopt strong measures to reduce the drastic fluctuations of foreign exchange reserves,and maintain the stable and healthy development of our country's economy.