Exchange Rate Spillover Effect Of RMB Exchange Rate Fluctuation On Main Countries Along The Belt And Road

Under the background of financial liberalization,the transmission effect of information among financial markets is gradually strengthened.Exchange rate is not only the vane of financial markets,but also the bridge of international capital flows.Since 2013,general secretary Xi Jinping put forward the Belt and Road initiative,China's trade with the countries along the border,financial investment has been increasing,and the internationalization and regionalization of RMB have been pushed forward.The exchange rate fluctuation of RMB will also affect the exchange rate of the countries along the line through the transmission of market information,resulting in spillover effects.However,in the current study,scholars have studied the spillover effect of RMB exchange rate volatility on developed countries and ASEAN countries,and lack of overall thinking on the Belt and Road area.Only by making clear the spillover effect of RMB exchange rate fluctuations in various regions can we take targeted measures to expand the regional influence of RMB,accelerate the internationalization of RMB,and strengthen China's position in the countries along the belt and road.Firstly,by analyzing the development and trade situation of each country in the "one belt and one road" region,the representative countries are involved in various regions along the line.Then,the transmission mechanism of exchange rate market spillover effect is analyzed,and the volatility of RMB and the "The Belt and Road" regional currency is compared,providing theoretical basis for the spillover effect between them.The model of spillover effect is selected according to its advantages and disadvantages,applicable types,and then VAR-MVGARCH-BEKK model is established to analyze the spillover effect of RMB exchange rate fluctuation on the exchange rate of sample countries.The empirical results show that the fluctuation of RMB exchange rate has a certain radiation effect on the sample countries,and the mean spillover effect is significant.Except for the sample countries selected in West Asia,the fluctuation of RMB exchange rate has a volatility spillover effect on other sample countries.It shows that the RMB occupies a certain position in the " The Belt and Road" area.However,due to the fact that the use and recognition of RMB in the region is not high enough,the extent of the impact of the RMB in various regions along the line is not enough.We should further promote China's trade with the " The Belt and Road" regional trade,try out RMB denominated currency,increase financial cooperation with countries in the region,develop medium and long-term investment and financing projects,increase the number and proportion of direct investment based on RMB,moderately relax the restrictions on foreign direct investment of RMB to China,and enrich the market of RMB derivatives.The way to improve China's financial system effectively promotes the development of RMB regionalization and promotes China's position in the "one belt and one way" region.