The Impact on RMB Internationalization Process: Exchange Rate Expectation and Foreign Trade

Yinghua Ren; Weiwen Gu; Yinghua Ren; Weiwen Gu

doi:10.3934/QFE.2017.1.114

Quantitative Finance and Economics

2017, Volume 1, Issue 1: 114-124. doi: 10.3934/QFE.2017.1.114

Previous Article Next Article

Research article Special Issues

The Impact on RMB Internationalization Process: Exchange Rate Expectation and Foreign Trade

Yinghua Ren ^,,
Weiwen Gu

College of Finance and Statistics, Hunan University, Changsha, Hunan, China

Received: 20 January 2017 Accepted: 04 March 2017 Published: 10 April 2017

This paper examines the impact of exchange rate expectation and foreign trade on the process of RMB internationalization based on an SVAR model. Considering the data limitation, this paper we present the progress of RMB internationalization separated by Hodrick-Prescott filter from Jul 2009 to Aug 2016. This study observes that the RMB appreciation expected as well as the reasonably increasing foreign trade may promote RMB internationalization; the impact of exchange rate expectation volatility plays a leading role. Therefore our empirical results have important implications for policymakers in reasonably controlling the scale of foreign trade and guide formation of exchange rate mechanism.
- RMB internationalization process,
- foreign trade,
- exchange rate expectation
Citation: Yinghua Ren, Weiwen Gu. The Impact on RMB Internationalization Process: Exchange Rate Expectation and Foreign Trade[J]. Quantitative Finance and Economics, 2017, 1(1): 114-124. doi: 10.3934/QFE.2017.1.114

Related Papers:

Abstract

This paper examines the impact of exchange rate expectation and foreign trade on the process of RMB internationalization based on an SVAR model. Considering the data limitation, this paper we present the progress of RMB internationalization separated by Hodrick-Prescott filter from Jul 2009 to Aug 2016. This study observes that the RMB appreciation expected as well as the reasonably increasing foreign trade may promote RMB internationalization; the impact of exchange rate expectation volatility plays a leading role. Therefore our empirical results have important implications for policymakers in reasonably controlling the scale of foreign trade and guide formation of exchange rate mechanism.

References

[1]	Cheung YW (2014) The Role of Offshore Financial Centers in the Process of Renminbi Internationalization. Singap Econ Rev (SER): 472.
[2]	Cohen BJ (2012) The Yuan Tomorrow Evaluating China's Currency Internationalization Strategy. New Political Econ 17: 361-371.
[3]	Liu HQ (2012) Study on RMB Cross-Border Settlement in China's Foreign Trade Enterprises. Proc 2nd Int Conf Green Commun Networks 2012 (GCN 2012) 1: 533-541.
[4]	Otero-Iglesias M (2011) The Internationalization of Renminbi: Prospects and Risks. Real Inst Elcano: 1-10.
[5]	Sha WB, Liu HZ (2014) RMB Internationalization, Exchange Rate Fluctuation and Exchange Rate Expectations. Stud Int Financ 8: 10-18.
[6]	Wang SM (2016) The Dynamics of Overseas RMB Demand from the Perspective of Exchange Rate Expectation-Based on the Research on Offshore RMB Market. Stud Int Financ 11: 66-75.
[7]	Wang XL, Liu HH (2012) On Homony and Equilibrium among Balance of Trade, Foreign Exchange Reserve and RMB Internationalization. World Econ Study: 11.
[8]	Yao XY, Jie T (2010) The Micro-Analysis of RMB Internationalization on the View of Foreign Trade. J Xiangtan Univ (Philos Soc Sci) 16: 1531-1540.
[9]	Zhang B, Xu QY (2013) RMB's Internationalization under the System of Limited Exchange Rate and Capital Account Control. Int Econ Rev: 237-253.

Reader Comments

Your name:*

Email:*
© 2017 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)