Research On The Exchange Rate Spreads Between Onshore And Offshore RMB Market

Because of the national system,China has been implementing measures of foreign exchange control since then,thus creating an offshore RMB market.The offshore RMB market and the Chinese RMB RMB market are both fragmented and connected at the same time.However,with the continuous change of various policy systems,the relationship between the two markets has also changed.Under the background of China's rapid development,foreign exchanges will not only be more closely related to the level of manufacturing and trade,but also will have more than a month's worth of investment and financing needs and supply.Therefore,there will be more and more demand on the return to the circulation of money.China will gradually liberalize the restrictions on the circulation of funds because of its own initiative and foreign passive pressure.However,the sudden institutional change will only cause confusion.The offshore RMB market in Hong Kong has emerged as a pilot for the operation of the system.This research mainly focuses on the differences in the exchange rate of onshore and offshore RMB due to multiple factors such as circulation control and market participants.Firstly,the existing research directions and conclusions are clearly clarified from the literature review,and further focused on the less studied individually.The exchange rate spreads are studied in depth.The research method is divided into three parts.The first is to clarify the market that generates exchange rate prices,to clarify the concept of off-shore markets and the development of Hong Kong and other offshore markets with RMB.Further research is conducted on the theory and mechanism of the difference in the price of the exchange rate between the onshore market and the offshore market.The third part is to empirically study the exchange rate spread,establish a forecast model based on the exchange rate spread as a factor,and explore whether it can effectively predict the exchange rate price.The final result shows that the exchange rate spread can better predict the price of onshore RMB,but the volatility of the price can only effectively predict the model at half the time interval.