The Research Of Interaction Between RMB Exchange Market Pressure And Monetary Policy In China

Since the “7.21 exchange rate reform” in 2005,the floating flexibility of the RMB exchange rate has gradually increased,the RMB exchange rate formation mechanism has become more market-oriented.Under the background of the long-term surplus of Balance of payments,China's foreign exchange reserves have continued to grow,and the scale of foreign exchange reserves has ranked first in the world.The EMP is a concept that reflects the extent of imbalances in a country's economy.With the gradual liberalization of the RMB exchange rate flexibility,the correlation between RMB exchange rate fluctuations and domestic monetary policy is more obvious.The huge foreign exchange reserves are also closely related to the effectiveness of China's monetary policy.In this context,this paper has a certain theoretical and practical significance to study the relationship between RMB EMP and China's monetary policy.This paper studies the relationship between RMB EMP and monetary policy.First,sum up the research results of predecessors,sort out the related concepts and theories of EMP and monetary policy.Then,after summarizing the development of China's exchange rate,foreign exchange reserves and monetary policy after the "7.21 exchange reform",further empirical research is carried out: empirically measure the EMP value of China during the sample period by model independent method and model dependence method respectively to make the Make the results more accurate and reliable;After measuring the pressure on the RMB foreign exchange market,the VAR model is used to study the relationship between the pressure of the RMB foreign exchange market and the endogenous monetary policy variables such as economic growth,interest rates,inflation,and credit growth,research shows that there is an interaction between RMB EMP and monetary policy variables.Finally,combined the macro factors that affect the pressure on the foreign exchange market and empirical analysis,proposing countermeasures to alleviate RMB EMP.