Research Of Inter-relation Between RMB Exchange Rate,Shout-run Capital Flight

In the context of the escalating trade war between China and the United States,the two-way fluctuation of the RMB exchange rate has become normal,and the scale of the short-term capital flowss has also expanded.From April to mid-June 2018,the exchange rate of the RMB against the US dollar depreciated by more than 2.5%,by mid-august it had fallen by more than 7.5%.On August 5,2019,both the onshore and offshore exchange rate of RMB against the US dollar fell below 7 to 1.The depreciation of the exchange rate and the rising risk aversion of domestic and foreign investors will lead to large-scale of short-term capital outflowss in China.This will not only bring great financial risks to domestic enterprises,but also threaten the healthy development of China’s economy.Therefore,it is of great practical significance to study the risk of RMB exchange rate fluctuations and the short-term capital flows as well as the interaction between the risk of RMB exchange rate fluctuations and the short-term capital flows.This paper combines qualitative and quantitative research methods.Firstly,it reviews the relevant theories of exchange rate,short-term capital flows and risk measurement.Secondly,it analyzes the current situation of RMB exchange rate and short-term capital flows in China since 2006.Thirdly,by selecting the monthly data of RMB exchange rate and short-term capital flows from 2006 to 2019,using the CVaR model based on the GARCH family model,calculates the CVaR value of the RMB exchange rate and short-term capital flows in recent years,and explores the risks caused by the fluctuation of the RMB exchange rate and short-term capital flows to the Chinese economy.Finally,using the tvp-sv-var model to study the interaction between RMB exchange rate and short-term capital flows,and explore the interaction between the RMB exchange rate and short-term capital flows in different periods.The research shows that since 2015,the volatility range of the CVaR value of RMB exchange rate and short-term capital flowss has been expanding continuously,indicating that the risks brought to economic development by the fluctuations of the RMB exchange rate and short-term capital flowss have also shown an expanding trend;At the same time,the dynamic relationship between the RMB exchange rate and short-term capital flows is not fixed,but varies according to different periods.Based on the empirical results of this paper,combined with the current domestic and international situation,this paper gives out some suggestions,such as establish a flexible exchange rate mechanism determined by the market,reduce the risk of short-term capital flows;improve the liquidity of China’s onshore foreign exchange market;promote the reform of interest rate marketization;China’s ability to detect and manage exchange rate risks;strengthen supervision of short-term capital flows;prudently relax China’s capital controls;use China’s foreign exchange reserves reasonably and effectively;and deepen financial pilot reforms.