Research On Influencing Factors Of RMB Exchange Rate Based On Vector Autoregressive Model

The exchange rate issue has always been the focus of economic exchanges between countries in the world.It plays an important role in the stable development of countries' economies,balance of payments and trade development.Although the renminbi has undergone several exchange rate reforms,the renminbi exchange rate has not maintained long-term stability as expected,and there are still areas for improvement and improvement in China's exchange rate system.Therefore,studying the factors affecting the RMB exchange rate has certain significance for stabilizing the RMB exchange rate.First of all,this paper analyzes the changes in the RMB exchange rate over the past 30 years according to the time interval of China's exchange rate reform process.Then the theoretical analysis is carried out,and the four theories of exchange rate international balance of payments theory,purchasing power parity theory,currency exchange rate model and interest rate parity theory are compared,which has certain enlightenment for the selection of model variables.Then an empirical analysis was carried out,and a VAR model was established to analyze the impact of six factors on the RMB exchange rate.The time interval of the model is from January 2010 to December 2018.The model variables include M₂,bank 7-day interbank offered rate,RMB exchange rate,CPI,foreign direct investment,Shanghai Composite Index,and foreign exchange reserves.The model draws some conclusions: six factors have an impact on the RMB exchange rate.They cause different impulse responses,and their impact on the RMB exchange rate is different,the extent of influence,and the degree of interpretation.Finally,some suggestions were made for stabilizing the RMB exchange rate.