Research On The Mutual Influence Between Short-term Capital Flows And RMB Exchange Rate Under The New Normal

Affected by the economic situation at home and abroad,China's economy has entered the new normal stage since 2012,and the economy is facing adjustment and transformation pressures.The uncertain factors faced by the stable operation of the economy and finance are increasing,especially in 2005.After the reform,with the continuous improvement of the RMB exchange rate market formation mechanism and gradual liberalization of capital account regulations,the fluctuation of the RMB exchange rate became more pronounced,and the pressure on short-term capital outflows remained enormous.In order to ensure that China's economy entered the new normal,the economy and finance can operate stably and in the short term.Capital flow risks and exchange rate risks need to be strictly guarded.Therefore,it is of great theoretical and practical significance to study the short-term capital flow under the new normal and the mutual influence of the RMB exchange rate.Under the background of continuous liberalization of capital account regulations and continuous deepening of RMB exchange rate market reform,this article refers to many domestic and foreign articles on the relationship between RMB exchange rate and short-term capital flow.The paper first discusses short-term capital flows and RMB exchange rates.The theoretical mechanism of the impact is analyzed.Secondly,the current status of China's short-term capital flows under the new normal and the dynamics of the exchange rate of the RMB exchange rate are introduced respectively.Then the SVAR model is established.The short-term capital flow under the new normal and exchange rate fluctuations of the RMB exchange rate are analyzed through impulse response and variance decomposition.Influences,draw empirical results,and finally put forward corresponding policy recommendations based on theoretical analysis results and empirical analysis results.Research shows that after the new normal of the economy,with the reform of the exchange rate market and the increasing degree of convertibility of capital accounts,short-term capital flows are more sensitive to fluctuations in the exchange rate of the RMB,that is,the depreciation of the RMB exchange rate will result in large outflows of short-term capital in a short period of time.However,the impact of short-term capital outflow on the devaluation and devaluation expectations of the RMB exchange rate is more significant than before the new normal.After studying the effects of the new normal and short-term capital flows and the RMB exchange rate,the policy recommendations proposed here include:maintaining the stable operation of the domestic economy;strengthening the supervision of cross-border capital flows;improving the reform of the RMB exchange rate formation mechanism;and further promoting the interest rate market.Reform of the formation mechanism;steadily promote the opening up of the capital account.