I. Historical Review of RMB Exchange Rate
1. Review exchange rate changes
RMB exchange rate refers to the international price of RMB. Since the reform and opening up, the RMB exchange rate has experienced a sharp depreciation before 1994 and a slow appreciation after 1994 (see table):
Table1979 —— RMB-USD exchange rate table in 2007 (direct quotation calculation)
age
1979
1989
1990
1993
1994
1995
1997
1998
2002
2005
2006
2007
exchange rate
1.47
3.76
4.78
5.76
8.62
8.32
8.30
8.28
8.27
8. 1 1
8.00
7.6 1
As can be seen from the table, before 1994, the RMB exchange rate depreciated sharply. This is because the overall economic strength of China is not strong at this stage. In order to speed up the economic development of China, the Chinese government has adopted the method of gradually depreciating the RMB to promote China's exports and improve the international competitiveness of our products, thus gradually enhancing China's economic strength.
After 1994, the RMB exchange rate appreciated slightly. This is because after 1994, the RMB exchange rate was determined as "a single and managed floating exchange rate system based on market supply and demand." Since then, the RMB exchange rate has gradually appreciated from 1: 8.62 to19951231:8.32. From 1997, it is basically stable at the level of 1: 8.23. In fact, RMB exchange rate reform has become a practical "fixed exchange rate system pegged to the US dollar".
2. Review of exchange rate system.
After the reform and opening up, China's exchange rate system has gone through three stages:
The first stage, reform and opening up, lasted from 1993 to 12.30. At this stage, China adopted the exchange rate reservation system and implemented dual exchange rates, namely, the official exchange rate and the swap rate. The former is higher than the latter. And set up foreign exchange swap centers in Shenzhen and Shanghai to conduct competitive trading and allow foreign exchange prices to float freely.
In the second stage, after 1994, China implemented a single and managed floating exchange rate system based on market supply and demand. At present, China has abolished the previous retention system, and foreign trade enterprises have implemented a unified system for the settlement and sale of foreign exchange to banks. When enterprises need to use foreign exchange, they need to buy foreign exchange from banks with legal import documents, which will no longer be examined and approved by foreign exchange management agencies. 1 99665438+February1day, China announced that it would accept Article 8 and implement full convertibility of RMB current account.
In the third stage, the current exchange rate system in China basically follows the new exchange rate system 1994 after the exchange rate reform. Only compared with 1994, market-based supply and demand is more flexible and prominent. The current exchange rate is no longer pegged to the US dollar, and the benchmark exchange rate will be determined with reference to a basket of currencies. In this way, we can refer to the deviation between the RMB market exchange rate and the comprehensive exchange rate of the currency basket, make discretionary choices and adopt a managed floating exchange rate system. After the central bank adjusts the exchange rate to 8. 1 1, the spot exchange rate of RMB against the US dollar will not change by 8.1.3%.
Second, the analysis of the influencing factors of the future trend of RMB exchange rate
As the expression of the external price of a country's currency, exchange rate is influenced by many factors. It is influenced by domestic and international factors. Besides economic factors, currency, as a symbol of national sovereignty, is often influenced by political and social factors.
1. Balance of payments situation
The balance of payments, loosely speaking, refers to the income and expenditure incurred in a country's foreign economic activities. The supply and demand of foreign exchange determines the level of exchange rate. The balance of payments is the dominant factor that determines the exchange rate trend. The balance of payments is the sum of various payments in a country's foreign economic activities. The balance of payments mainly includes three parts: the first part is the current account, which mainly includes commodity trade items, interest and profit, and labor payment. The second part is the capital account, which records all capital flows. The third part is official reserves, including foreign assets held by the central bank. At present, the central bank's reserves are mainly foreign financial assets, especially US dollars and US Treasury bonds. Both the current account and the capital account are in surplus, which will inevitably lead to a sharp increase in the official reserves of the central bank. When a country's international income exceeds its expenditure, it is a balance of payments surplus. In the foreign exchange market, it can be said that the supply of foreign exchange (currency) exceeds demand, so the local currency exchange rate rises and the foreign currency exchange rate falls. On the contrary, when a country's balance of payments is less than its expenditure, it is a balance of payments deficit. In the foreign exchange market, it can be said that the supply of foreign exchange (currency) is less than the demand, so the exchange rate of local currency declines and the exchange rate of foreign currency rises. The balance of payments can directly affect a country's exchange rate. The balance of payments surplus will make the foreign exchange rate of the country's currency rise. China's foreign trade has been growing rapidly since 1994, maintaining a trade surplus of 13. From June to August 2008, the total import and export volume reached 89 17.3 USD, up 23.5% year-on-year. The accumulated surplus is 60.78 billion US dollars, which has exceeded the surplus of last year (32 billion US dollars) by nearly 1 times. From the figures, China's trade surplus is indeed very large. Sustained trade growth and huge surplus not only caused a lot of trade frictions, but also brought continuous appreciation pressure to the RMB exchange rate. The continuous increase of China's foreign trade surplus may push up the RMB exchange rate, but since the exchange rate mechanism is controlled by the central bank, the RMB exchange rate will not fluctuate greatly according to market conditions. Under the current trade policy, investment policy and exchange rate policy, from the perspective of balance of payments, the supply of dollars in the foreign exchange market is far greater than the demand, and there is a great pressure for RMB to appreciate.
2. Inflation
Under the condition of paper money circulation, the basis of determining the exchange rate between the two countries is the purchasing power of money. Under the condition of inflation, the purchasing power of money will decline. Therefore, the difference of inflation rate between the two countries will inevitably lead to the change of exchange rate. Generally speaking, if the inflation rate of country A exceeds that of country B, the exchange rate of country A's currency will fall. On the contrary, the exchange rate of country A's currency will rise. The influence of inflation rate on exchange rate is not directly and obviously shown now, but through indirect channels for a long time. China is a developing country, which is in the stage of rapid economic development. Developing countries may have a higher inflation rate during the economic take-off, but their exchange rates will not depreciate in proportion. The essence of relative purchasing power parity is that exchange rate changes are determined by the relative inflation rates of China and the United States. If the inflation rate in China is higher than that in the United States, the RMB should depreciate, and vice versa. The theory of relative purchasing power parity suitable for developing countries (China) should be that the percentage of exchange rate change should be equal to the difference between the inflation rates of the two countries, minus the non-tradable goods adjustment coefficient of inflation rate and minus the productivity improvement adjustment coefficient. At present, there is an obvious inflation trend in China's economy. There is a great pressure on RMB exchange rate to appreciate.
3. Interest rate parity
Interest rate, as the price of using funds or the income of giving up using funds, will also affect the exchange rate level. When the interest rate is high, the use cost of local currency funds increases, and the supply of local currency in the foreign exchange market decreases relatively; At the same time, when the interest rate is high, the income from giving up the use of funds rises, and foreign capital inflows are absorbed, which makes the foreign currency supply in the foreign exchange market increase relatively. In this way, from two aspects, the rise of interest rate will promote the rise of local currency exchange rate. Interest rate parity points out that the expected rate of return of deposits in any two currencies should be the same. In other words, the deposit spread between two different currencies should be equal to the percentage of exchange rate change expected by the market. The premise of establishing interest rate parity is a balanced market interest rate plus full convertibility of currency. Assuming that these two preconditions are met, after considering the interest income and the income from exchange rate changes, the actual rate of return of deposits in the two currencies should be the same. But we know that these two preconditions are not valid in China, so the explanatory power of interest rate parity in China is self-evident. Judging from China's economic system, there is still a lack of basic conditions for establishing interest rate parity: a balanced market exchange rate; The currency is fully convertible; Interest rate elasticity; Capital market. At present, the most important determinant of RMB exchange rate is at the level of commodity market. The inflow of foreign capital is mainly direct investment, and speculative capital is often mixed in the form of trade settlement. The impact of interest rate parity on exchange rate can not be directly reflected in the capital market, but only in the commodity market. International capital flow is confused with commodity flow. Therefore, interest rate parity has no direct influence on the change of RMB exchange rate. With the development of China's marketization, the role of interest rate parity will continue to strengthen. Because, firstly, China's economy is in line with the world economy, and China has realized RMB convertibility under current account in February. As China moves towards full convertibility of RMB and free flow of capital, its ability to explain and predict interest rate parity will become stronger and stronger. Second, China's interest rate policy is increasingly considering market factors.
4. Economic growth
The relationship between real economic growth rate and future exchange rate changes is more complicated. There are two main situations. If a country's exports remain unchanged, economic growth accelerates and the level of domestic demand increases, it will increase its imports and lead to a current account deficit. If a country's economy is export-oriented, economic growth is to produce more export commodities. In this case, the increase of economic growth rate can make the increase of exports make up for the increase of imports. Generally speaking, high growth rate will lead to more imports, which will put downward pressure on the exchange rate of domestic currency. However, the change of economic growth rate also reflects the change of a country's economic strength. Countries with fast economic growth and strong economic strength can enhance their confidence in their own currencies in the foreign exchange market, so the currency exchange rate may also rise. In fact, due to the synchronization of economic cycle changes in the capitalist world, the changes in economic growth rates of various countries occur at the same time and will not have much impact on exchange rates. Only when the economic growth rates of different countries are different will it affect foreign trade and foreign exchange market transactions. A strong engine of the economy is conducive to maintaining the stability and firmness of the RMB exchange rate, and the stability of the price level or even a slight decline will also promote the orderly upward movement of the RMB exchange rate.
5. Foreign exchange reserves
The foreign exchange reserves held by the central bank can show a country's ability to intervene in the foreign exchange market and maintain the exchange rate, so it has a certain effect on stabilizing the exchange rate. Of course, foreign exchange intervention can only have a limited impact on the exchange rate in the short term and cannot fundamentally change the basic factors that determine the exchange rate. The People's Bank of China released the data of China's foreign exchange reserves in the third quarter in its monthly routine monetary policy report. By the end of September, 2009, China's total foreign exchange reserves reached US$ 6543.8+09056 billion, a year-on-year increase of 32.92%. In July and August, foreign exchange reserves increased by $36 billion and $39 billion respectively. However, the growth of foreign exchange reserves slowed down in September, and the new foreign exchange reserves in that month were about $265.438+04 billion. In the first nine months, the average monthly growth rate of foreign exchange reserves reached $41900 million, exceeding the average monthly growth rate of $38.5 billion last year. The growth rate is very fast. Even with the economic development of China and the appreciation of RMB exchange rate, the increase of foreign investment activities will increase the output of capital. However, since the interest rate hike cycle in the United States is drawing to a close, on the contrary, there is still the possibility of raising interest rates in the future. The narrowing of the spread between China and the United States will help attract more hot money into China, which will inevitably put pressure on the continued appreciation of the RMB. On the whole, China's balance of payments will still push the RMB exchange rate upward in 2008, but the effect may be weakened.
6. Fiscal policy
In the long run, the real exchange rate will appreciate with the tightening of fiscal policy and depreciate with the expansion of fiscal policy. Because fiscal austerity will reduce the long-term level of government debt to GDP, thus increasing the proportion of net foreign assets to GDP. But the above role must be based on the free flow of capital. Judging from the actual situation in China, capital liberalization and trade liberalization are far from the level of industrial countries, the two-way flow of capital is restricted, and the process of policy tightening affecting the exchange rate is interrupted. Therefore, as far as the recent impact on the trend of RMB exchange rate is concerned, the direct effect of China's fiscal policy can be ignored, while the psychological indirect effect conforms to the above effect. Due to the high inflation and high growth in China in recent years, if the expected goal of low inflation and high growth is achieved, the psychological expectation of RMB exchange rate rising will inevitably occur.
7. Political situation
Political factors sometimes have a great influence on the exchange rate, but the time limit for the influence is generally short. China has always been in a stable and good political and social environment, which is conducive to economic development and makes foreign investors optimistic about the prospect of investing in China. This influx of investment has led to the increase of China's social wealth, which also has a great impact on the RMB exchange rate. Judging from the current situation, under the current monetary system in China, in order to digest the huge trade surplus, the domestic money supply is forced to expand excessively, and this expansion itself has played a role in further increasing the trade surplus. The huge trade surplus makes the pressure of RMB appreciation heavier and heavier, and the domestic inflation trend is more and more obvious. Therefore, the currency appreciation that China is currently facing is unhealthy.
8. Economic policy and central bank intervention
No matter under the fixed exchange rate system or the floating exchange rate system. In order to maintain exchange rate stability or consciously manipulate exchange rate changes to serve some economic policy purposes, monetary authorities in various countries will directly intervene in the foreign exchange market. Undoubtedly, this situation that directly affects the supply and demand of the foreign exchange market through intervention will not fundamentally change the long-term trend of the exchange rate, but will have a certain impact on the short-term trend of the exchange rate. From the practical point of view, the foreign exchange intervention of the central bank is very effective; And become part of the inter-bank foreign exchange market transactions. At present, the People's Bank of China and the Bank of China respectively control a large proportion of foreign exchange transactions, affecting the basic pattern of market supply and demand. As long as the current exchange rate mechanism does not change greatly, the central bank's intervention in the exchange rate will continue to be timely and effective, and it is fully capable of achieving the goal of not devaluing the RMB exchange rate proposed by the new government. However, if the exchange rate formation mechanism changes substantially, it will be difficult to judge the intervention role of the central bank. In the long run, the exchange rate mechanism will definitely change. The RMB exchange rate will further appreciate.
9. Impact of capital account
When investigating the influence of international hot money on a country's currency exchange rate, we can't ignore the error correction theory of hot money. According to this theory, due to the imbalance of financial structure, a country's credit expands infinitely, and a large number of foreign debts accumulate, forming an economic bubble. Hot money will impact the financial systems of these countries, absorb the economic bubbles of these countries and rebalance the unbalanced economic structure. This theory originated from the international speculative group headed by Soros, and has been continuously practiced. At the same time, it has been approved and supported by the United States and other countries with mature market systems and highly developed financial markets. Federal Reserve Chairman Ben alan greenspan once commented on the Asian financial crisis, appreciated the theory of error correction of hot money, and warned that countries in the Asian financial crisis used a large amount of foreign exchange reserves to maintain their misaligned currencies, which would only delay the time of error correction and even have the opposite effect. A country facing the impact of hot money may suffer heavy losses in the short term; But in the long run, it will help a country to establish a perfect exchange rate market mechanism, adjust the exchange rate level in time and plug the network. Once the RMB is fully convertible, the change of capital account will lead to the strong impact of international hot money on the RMB, which will inevitably intensify the appreciation pressure of the exchange rate.
10. Total demand and total supply
The structural inconsistency and quantity inconsistency in the growth of total demand and total supply will also affect the exchange rate. If the growth of import demand in total demand is faster than that of export supply in total supply, then the exchange rate of domestic currency will fall. If the overall growth of total demand is faster than the overall growth of total supply, the part that cannot be met by total demand will turn to foreign countries, resulting in an increase in imports, which will lead to a decline in the exchange rate of local currency. When the growth of total demand is generally faster than that of total supply, it will also lead to the excessive issuance of money and the increase of deficit, which will indirectly lead to the decline of the exchange rate of domestic currency. Therefore, to put it simply, he said that when the total demand grows faster than the total supply, the exchange rate of the domestic currency generally shows a downward trend. At present, the inflation in China is serious, the total supply exceeds the total demand, and the RMB exchange rate is under the pressure of appreciation.
In a word, there are many factors that affect the exchange rate, and the relationship between these factors is complicated. Sometimes these factors work at the same time, sometimes individual factors work, and sometimes even cancel each other out; Sometimes this factor plays a major role and another factor plays a minor role. However, for a long time, the law of exchange rate changes has been restricted by the balance of payments and inflation, so it is the basic factor that determines the exchange rate changes. Interest rate factors and exchange rate policies can only play a subordinate role, that is, they can help or weaken the role played by the basic factors. A country's fiscal and monetary policies play a decisive role in exchange rate changes. Under normal circumstances, setting the exchange rate at an appropriate level has become one of the policy objectives of monetary policy in various countries. Usually, the central bank uses three policy tools to implement monetary policy, namely, deposit reserve policy, discount policy and open market business policy. Speculation only adds fuel to the fire on the basis of the basic trend of exchange rate determined by other factors.
Three. A summary of the future trend of RMB exchange rate
Affected by the financial crisis, in1October, only 1 1 currencies appreciated, while many currencies depreciated. The depreciation of the Icelandic krona is as high as 53. 1%. The depreciation rates of Mexican peso, Brazilian real, South African rand and Australian dollar all exceeded 13%, while the Korean won depreciated 12.94%. Others such as Canadian dollar, Hungarian forint, Turkish lira and Chilean peso also depreciated by more than 8%. But recently, the RMB has risen slightly against the US dollar, and this slight fluctuation has been going on for a long time. From a global perspective, the RMB is a rare stable and strong currency this year. Since the middle and late July this year, with the continuous appreciation of the US dollar, the exchange rate of RMB against the US dollar has remained basically stable, with no ups and downs. During this period, the exchange rate between RMB and US dollar kept a small two-way fluctuation. Judging from the spot foreign exchange market, the central parity of RMB against the US dollar is in a stalemate, with only a few dozen daily fluctuations.
I think the RMB exchange rate will continue to rise, but its growth mode should be a small appreciation on the premise of basic stability. It is estimated that the RMB will appreciate 1. 1% against the US dollar by the end of this year. Next year, the rate of RMB appreciation will be greatly slowed down, with an appreciation of about 3%. Now investors' confidence is very fragile, and any trouble in the financial market will cause investors to panic. The stability of the RMB exchange rate against the US dollar helps to increase investors' market confidence. And the appreciation of the dollar is not necessarily a long-term trend. In the case of falling global financial asset prices, the appreciation of the US dollar is mainly due to the fact that US Treasury bonds are a good hedging tool. Once the economy stabilizes or recovers, the dollar may depreciate. Changes in the RMB exchange rate should take into account the long-term trend of the US dollar and avoid large fluctuations in the RMB exchange rate.
The appreciation of RMB will have a far-reaching impact on China's economic development, and we should correctly look at this trend of RMB. Generally speaking, the appreciation of RMB is beneficial to China's economic development, especially under the current inflationary pressure in China. In order to alleviate the current inflationary pressure, we should rely more on RMB appreciation. The appreciation of RMB can also change the international relations between China and other countries, and the long-term trade surplus is unfavorable to a country's economic development. RMB appreciation can change China's current trade situation by restraining exports and promoting imports, which is more conducive to the long-term economic development of China and other countries and the development of international relations between China and other countries. Thirdly, the appreciation of RMB will also have a great impact on China enterprises and domestic consumers. Specifically, it can reduce the relative prices of goods, benefit domestic consumers and increase the welfare of consumers. At the same time, it also forces domestic enterprises to strengthen competition, optimize industrial structure, enhance independent innovation ability, improve product quality and reduce product prices, thus promoting the transformation of enterprise growth mode from "extensive" to "intensive".
Thank you speech
After intense busy and study, my graduation thesis is drawing to a close. As a junior college student who wrote his graduation thesis for the first time, many aspects were not considered comprehensively due to lack of experience. Without the supervision and guidance of the tutor and the support of the classmates, the difficulty of completing this paper is unimaginable.
First of all, I would like to thank my thesis tutor, Mr. An Ming 'an. Teacher An is busy with her work on weekdays, but she gave me careful guidance at every stage of my graduation thesis, from topic selection to outline drafting, from consulting materials to writing the first draft of my graduation thesis and finalizing it. There are many mistakes and loopholes in my paper, but Mr. An corrected it carefully. In addition to admiring Mr. An's professional level, his rigorous academic attitude and scientific research spirit are also examples for me to learn forever, which will have a positive impact on my future study and work.
Secondly, thanks to all the teachers in the university for three years. Their careful teaching laid a solid foundation for my financial theory. At the same time, I want to thank all my classmates. It is because of their support and encouragement that my thesis can be successfully completed.
Finally, I would like to thank the Financial Vocational College of Shandong Institute of Light Industry for its vigorous training in the past three years.