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This study examines the role of the Chinese renminbi (RMB) as an international anchor currency. After China abandoned its tight US dollar (USD) peg in 2005, the RMB found greater popularity as a reserve currency. This change in the RMB's role reflected China's growing presence in the global economy, even challenging the USD in some of the 155 countries that signed on to the Belt and Road initiative (BRI). Modifying the approach of Ahmed (2021) to estimate basket weights in exchange rate policy for the currencies of 63 advanced and emerging economy currencies, we account for potential drivers of the exchange rate omitted in previous studies to obtain unbiased anchor weight estimates. Unlike earlier studies, we find that the RMB's anchor weight in exchange rate policies remains low irrespective of China's global role. Overall, the weight of the RMB averaged 6 %, compared to an average share of 58 % for the USD and 35 % for the euro. We also find that the USD, euro and yen anchor choices are strongly interlinked. A change in the anchor weight of any of these three currencies results in a strong opposite change in the weights of other two. Changes in RMB anchoring, however, do not materially impact USD, euro and yen weights. An increase in financial markets volatility leads developing countries to increase anchor weights of the developed countries currencies USD, euro and yen. Heightened geopolitical uncertainty only increases the weights of the USD and euro. [ABSTRACT FROM AUTHOR]

This article is dedicated analyzing the interdependence of oil prices and exchange rate movements of oil exporting countries (the Russian ruble, Euro, Canadian dollar, Chinese yuan, Brazil real, Nigerian naira, Algerian dinar). The study also considers risk-based oil market spillovers in global crisis periods with integrated decision recommendation systems. For this purpose, a fuzzy decision-making model is created by considering the bipolar model and imputation of expert evaluations with collaborative filtering. The main contribution of this study is both its econometric analysis and evaluations based on expert opinions. This helps reach more crucial results. All three of the recent shocks (2008, 2012, 2020) in the oil market are transmitted to foreign exchange markets of oil-producing countries. At the same time, the last shock of 2020 caused by the COVID-19 pandemic has not yet been fully reflected on the Russian ruble exchange rate. Correlation parameters became weaker in the last year, as the Russian ruble correlation coefficient fluctuates between − 0.5 and 0.5. However, before 2020 the spillover effect had a higher significance (in the range from − 0.8 to − 0.1). Nigerian naira and Algerian dinar were showing almost the same movements, while the Russian Ruble was in a different trading range. [ABSTRACT FROM AUTHOR]

According to the article, the US has fared better than China in terms of economic recovery from the pandemic, with GDP surpassing pre-pandemic forecasts while China has struggled due to structural issues like a property slump. As a result, China's economy is unlikely to match the size of the US economy until the mid-2030s, and living standards in China will remain lower than those in the US. Long-term growth forecasts for China show a decelerating growth path, with GDP growth expected to fall to around 2% by 2040. There are also risks to Chinese growth, including the property sector slump and the potential impact of trade and technological decoupling. Additionally, there are concerns that official Chinese GDP data may overstate the country's economic performance. Overall, the article suggests that China's prospects for economic catch-up with the US are receding. [Extracted from the article]

China is transitioning its industrial structure from labor-and resource-intensive industries that previously contributed significantly to the country's GDP growth to technology-intensive industries emphasizing a highly-skilled workforce and sustainability to achieve high-quality economic growth. This paper examines the impact of the RMB exchange rate on high-quality economic growth through theoretical modeling and empirical analysis and discusses the variable of overseas education to explore the mechanism of how the RMB exchange rate and overseas education jointly impact high-quality economic growth. The research sample includes the National Bureau of Statistics data on education from 1995 to 2015, the Bank for International Settlements (BIS) data on the RMB exchange rate, and the added value of China's high-quality economic growth estimated based on the national economy data. An empirical analysis of theoretical expectations was conducted, finding that RMB appreciation could make a positive contribution to China's high-quality economic growth; RMB exchange rate fluctuations would impact the relative cost of overseas education and overseas returnees could have a positive impact on domestic resource utilization efficiency and domestic capacity to make sci-tech innovations, thereby injecting vitality to high-quality economic growth. This study focuses on both the RMB exchange rate and the population studying abroad, providing additional observation dimensions to existing research. [ABSTRACT FROM AUTHOR]

Decisions of central banks on foreign exchange rates are based on the comovement of foreign exchange (FOREX) in mature markets such as US dollar rates to the British pound, euro, Chinese yuan, Japanese yen and Australian dollar. We investigate the long-run movement and dynamic quantile connectedness of volatility among pairs of these exchange rates. The updated residual-based fractional cointegration testing framework using narrow-band frequency domain least squares estimator is used to obtain the residual series for fractional cointegration. Quantile dynamic connectedness framework for volatility spillovers at different market conditions, depicted by quantiles, are used. We find evidence of long memory cointegration in seven pairs of exchange rates involving the previously mentioned currencies. These seven cases also correspond to a higher average index of quantile connectedness, with the effect of connectedness phasing out at higher quantiles and being more visible at lower quantiles. A portfolio investment strategy using optimal portfolio weights and hedge ratios for maintaining the accrued profit at the FOREX market is also presented. [ABSTRACT FROM AUTHOR]

China's interaction with the international financial system is driven by its growing economic importance in the world. However, China's financial influence has been much under-presented compared with its economic power. This mismatch provides an opportunity for China to promote greater inclusiveness and better balance of power in global financial governance. The accelerated financial opening-up, exchange-rate flexibility, and deepened domestic reform also nourished the ambition of internationalization of the renminbi that would have impact on the global reserve currency system. This paper investigates the motivations behind China's engagements with the international financial system, the approaches China adopted to achieve its goals, and the key domestic policies required for China to gain more weight in the global financial market. [ABSTRACT FROM AUTHOR]

Uncertain hypothesis test is a statistical tool that uses uncertainty theory to determine whether some hypotheses are correct or not based on observed data. As an application of uncertain hypothesis test, this paper proposes a method to test whether an uncertain differential equation fits the observed data or not. In order to demonstrate the test method, some numerical examples are provided. Finally, both uncertain currency model and stochastic currency model are used to model US Dollar to Chinese Yuan (USD–CNY) exchange rates. As a result, it is shown that the uncertain currency model fits the exchange rates well, but the stochastic currency model does not. [ABSTRACT FROM AUTHOR]

Research background: Most transactions in world trade are invoiced in several international currencies. The changes in the distribution of the great economic powers and the strengthening of the position of developing countries make it necessary to consider the factors determining the choice of trade invoicing currency and to assess the prospects of the dollar as an invoicing currency and the possibility of strengthening the position of developing countries' currencies in this function. Purpose of the article: The aim of the paper is to assess the factors influencing the choice of invoicing currency for international trade in 2000-2019. Methods: The analysis of factors influencing the choice of international trade invoicing currency is based on panel data modelling. The study is conducted for a group of 55 countries. It is assumed that the following variables may influence the currency position in the trade invoicing function: the share of the issuer's country in the bilateral trade, inflation and exchange rate. Findings & value added: The analysis showed that despite the decreasing share of the United States in world trade, the U.S. dollar remains the most important export invoicing currency. The main factors influencing the dollar's dominance are the U.S. share of countries' exports, inflation in developing countries, and the exchange rate in advanced economies. The great significance of trade share as a determinant of the position of the trade invoicing currency is an important indication of the strengthening position of developing country currencies, particularly the Chinese yuan. The obtained results confirm, with the use of more complete data, the validity of the dominant currency paradigm and enrich the still underdeveloped analysis in the area of international macroeconomics using panel data analysis. [ABSTRACT FROM AUTHOR]

From the Bretton Woods agreement in 1944 till the present day, the US dollar has been the dominant currency in world trade. However, the rise of the Chinese economy has recently led to the emergence of trade transactions in Chinese yuan. Here, we mathematically analyze how the structure of international trade flows would favor a country to trade whether in US dollar or in Chinese yuan. The trade currency preference of a country is modeled as a binary variable with the properties of a spin in an Ising model. The computation of this trade currency preference is based on the world trade network built from the 2010–2020 UN Comtrade data and is determined by two multiplicative factors: the relative weight of trade volume exchanged by the country with its direct trade partners and the relative weight of its trade partners in global international trade. The performed analysis, based on the convergence of the Ising spin interactions, shows that from 2010 to present a transition took place, and the majority of the world countries would now have a preference to trade in Chinese yuan if one only considers the world trade network structure. [ABSTRACT FROM AUTHOR]

This study examined the capabilities of six cryptocurrencies as a hedge and safe haven against the stock indices and foreign exchange rate in the East Asia-5 markets. According, MGARCH-DCC was adopted and implemented in data collection processes together with Rathner and Chiu regression method, which spanned from April 2013 to December 2019. The results revealed that these cryptocurrencies had dissimilar hedging and safe haven capabilities across various stock indices and exchange rates in the East Asia-5 markets. In particular, Bitcoin, Litecoin, and Ethereum offered strong hedge properties on most of the East Asia-5 equity indices. Moreover, Bitcoin and Litecoin only provided a safe haven for Japanese Yen currency, while Taiwanese equity indices and Chinese Yuan currency can be safely protected via an investment into Stellar. [ABSTRACT FROM AUTHOR]

Purpose: The stability of exchange rates facilitates international trade, diminishes portfolio risk, and ensures that economic policies are effective. The war in Ukraine is showing that the European financial system is still fragile to external shocks. This paper examines the consequences of the Russian invasion of Ukraine on five Euro exchange rates. The final goal is to empirically test whether the ruble caused the euro to depreciate with the Russian invasion of Ukraine. Design/methodology/approach: The exchange rates analyzed are Euro/Russian Ruble, Euro/US Dollar, Euro/Japanese Yen, Euro/British Pound, and Euro/Chinese Yuan. The data collected are daily and cover the period from November 1, 2021, to May 1, 2022. In this context, the changes in the FX rates reflect two months of the ongoing war in Ukraine. The FX rates used in the study contain 137 observations indicating five months of daily series. Findings: The results from impulse response function, variance decomposition, SVAR, and VECM indicate that the EUR/RUB significantly influenced the Euro devaluation. On the other side, the FX rates used in our work altogether hold long-run cointegration. The situation is different in the short run, where only EUR/RUB, EUR/USD, and EUR/CNY possess significant relations with other parities. Originality/value: The Ruble is not among hard currencies, but its position strengthened during this period due to the importance of Russian gas to the Eurozone. The results indicate that even weak currencies can be influential depending on the geopolitical and economic situation. To this end, diversification remains a valid concept not only in portfolio construction but also for the preservation of the national economy. [ABSTRACT FROM AUTHOR]

The aims are to analyze the fluctuation forecast of exchange rate markets, including the Chinese Yuan (CNY), and discuss applying the neural network model in the Value at Risk (VaR) measure. Therefore, six exchange rate markets are selected as the research objects, with the CNY exchange rate market as the main body, to analyze and explain the exchange rate fluctuation risks. Second, based on the overview of the neural network model, the Deep Belief Network (DBN), Multilayer Perceptron (MLP), and Long Short-Term Memory Network (LSTM) are introduced, and a VaR method based on risk measurement is proposed. Finally, based on the number of excess days (Exc) and the Kupiec test, the VaR measure results under different models are analyzed. Results demonstrate that the CNY exchange rate market's historical data are relatively concentrated, with minor fluctuations, and the overall change is a sharp right shift. Compared with the benchmark model Generalized AutoRegressive Conditional Heteroskedasticity, the three neural network models show excellent risk measurement performance for different exchange rate markets. Based on Exc, the DBN model has the optimal risk forecast performance. In the CNY exchange rate market, the Exc values corresponding to the DBN and LSTM models are small, and the forecast performance is fair. Based on the Kupiec test, in addition to the Great Britain Pound exchange rate market, the three neural network models perform well in measuring the risks of the other five exchange rate markets. Besides, the MLP model has the optimal performance in measuring the CNY risks. Hence, the neural network models have excellent applicability in measuring the risks of exchange rate markets. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of real exchange rate volatility and misalignment on exports and imports between China and the United States. Our empirical analysis used the quarterly time series data over the 1994Q:1–2019Q:4 period. We used the ARDL-bound testing approach for the short- and long-run relationship. The empirical results reveal that China's real exchange rate volatility and misalignment significantly impact China's real exports and imports over the sample period. In the short-run, the relationship between real exchange rate misalignments and China's exports is positive, whereas negative with imports from the United States. In the long run, the real exchange rate misalignment positively affects exports and negatively affects imports. The evidence suggests that both higher real exchange rate volatility and misalignment directly affect the relative price of goods and encourage China exports to United States. [ABSTRACT FROM AUTHOR]

This study adopts the New Keynesian theoretical model to analyse the heterogeneity spillover effect of U.S. permanent and temporary monetary policy shock on China's economy through an exchange rate channel. It also employs the Bayesian technique to estimate SVAR model and obtain two main results. First, the permanent increase in the nominal interest rate in the U.S. causes Chinese yuan appreciation and U.S. dollar depreciation, which has a negative spillover impact on China's economy and leads to the decline in China's real output. Second, the temporary increase in the nominal interest rate in the U. S. leads to Chinese yuan depreciation, which has a positive spillover impact on China' s macroeconomy and leads to the rise of China's real output. [ABSTRACT FROM AUTHOR]

The purposes are to predict exchange rate fluctuations more accurately and enhance Chinese enterprises' abilities to avoid exchange rate risks. Renminbi (RMB) exchange rate fluctuation's prediction methods are studied based on data mining technology. The auto-regressive integrated moving average (ARIMA) model is introduced first using a modeling method that combines linear and nonlinear models. The linear prediction is obtained by the ARIMA model's application in the RMB exchange rate's dynamic fluctuation analysis. The nonlinear residual prediction is obtained by integrating the ARIMA model with the convolutional neural network (CNN) algorithm. The RMB exchange rate fluctuations' influence mechanism on China's economic growth is explored by theoretical analysis and empirical research. The US dollar's daily central parity rate (USD) data against the RMB from September 2015 to March 2019 are selected for model verification, obtaining the exchange rate's logarithmic return sequence (RUSD). [ABSTRACT FROM AUTHOR]

In this study, we propose to employ the conditional autoregressive range-mixed-data sampling (CARR-MIDAS) model to model and forecast the renminbi exchange rate volatility. The CARR-MIDAS model exploits intraday information from the intraday high and low prices, which has the capacity to capture the high persistence of conditional range (volatility). The empirical results show that the range-based CARR-MIDAS model provides more accurate out-of-sample forecasts of the renminbi exchange rate volatility compared to the return-based GARCH and GARCH-MIDAS models and the range-based CARR model for forecast horizons of 1 day up to 3 months. In addition, the superior predictive ability of the CARR-MIDAS model is robust to different forecast windows. Hence, our CARR-MIDAS model provides a promising tool for forecasting the renminbi exchange rate volatility. [ABSTRACT FROM AUTHOR]

This paper intended to employ a portfolio approach to assess the effect of exchange rate expectation on Chinese RMB internationalization and empirically test the interactive effects among short-term capital flows, RMB appreciation expectation and the internationalization process using a VAR model with monthly data ranging from February 2004 to December 2020. The results suggest that RMB exchange rate appreciation could lead to an increase in the foreign demand for RMB and RMB denominated assets, while RMB internationalization would attract more short-term capital inflow due to the reduced transaction costs. The empirical evidence from the VAR model estimation confirms the finding that expected RMB appreciation induces short-term capital inflow and promotes RMB internationalization. The robustness checks confirm the evidence. The results have important policy implication for RMB internationalization and for maintaining a sound and stable financial system. [ABSTRACT FROM AUTHOR]

We analyse volatility spillovers between the on- and offshore (CNY and CNH) Renminbi exchange rates towards the US dollar (USD). The volatility impulse response (VIRF) methodology introduced by Hafner and Herwatz (2006) is applied to several shocks between January 2012 and December 2019. Furthermore, we propose a novel way of estimating VIRFs based on Bayesian estimation of the MV-GARCH BEKK model. A simple Independence Chain Metropolis-Hastings algorithm allows drawing VIRFs in an efficient manner, allowing to analyse the significance and persistence of volatility shocks and associated volatility spillovers. The VIRF results show that the CNH exchange rate promptly reflects the global market demand and supply, while the CNY exchange rate reacts with a time lag. The VIRF results also show the existence of spillovers between the two markets as the co-volatility increases in response to shocks. [ABSTRACT FROM AUTHOR]

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This paper offers an empirical characterization of the relation between the international price of oil and exchange rates that is both useful and reliable. Our characterization is useful because it rests on information of asset prices that are determined in functioning asset markets. Our characterization is reliable because its maintained assumptions are not rejected by the data. Four features differentiate our work from previous analyses. First, our reliance on bilateral rates opens previously ignored financial arbitrage opportunities between oil prices and exchange rates. Second, our emphasis on statistical testing makes our characterization empirically reliable. Specifically, we use a vector-error correction modeling strategy in which both oil prices and exchange rates are endogenous. This framework allows testing for the existence of an arbitrage relation, for the direction of causality, for parameter constancy, for white noise residuals, and for forecast accuracy. Third our reliance on data through 2020 makes our analysis timely. Fourth, to emphasize the advantages of our approach, we compare our results to those derived for formulations relying on effective exchange-rate indexes. [ABSTRACT FROM AUTHOR]

Strong policies that deliver stronger fundamentals and a stronger currency are very much in the national interest. There can be some short-term advantages to currency depreciation, but the United States is better served by making clear that we intend to pursue strong policies, and in turn that generates a well-functioning international order. There has been a lot of progress with internationalization of the Renminbi, but there are some pretty serious obstacles to its becoming a major reserve currency. Clearly the Chinese Renminbi is playing more of a role in international finance. However, there are foundations for being a major international currency, and right now China does not seem to be moving too quickly to build those. These include capital controls, heavy management of the exchange rate, and financial repression. The phase one managed trade deal with China has targets that are likely unachievable, and continuing protectionist US policies would more likely put upward pressure on the dollar. It would be nice for the US dollar to remain strong because we have really good policy and fundamentals. It seems more likely we're going to remain strong because looking at Europe, Japan, and China, nobody is an impressive competitor. [ABSTRACT FROM AUTHOR]

China's increasing trade volume and continuous integration with global financial markets have strengthened the influences of the renminbi on the exchange rates of different currencies. Previous studies find closer co-movements between the renminbi and other currencies. This paper is novel to investigate the underlying determinants of the comovement further, using panel data of over thirty-four countries. Our results show that stronger bilateral trade and financial linkages with China have a positive association with the currency co-movement. Moreover, countries with greater flexibility in exchange rate regimes show stronger co-movements. These findings imply that growing co-movements are the consequence of autonomous decisions at the market rather than that of management by governments or central banks. [ABSTRACT FROM AUTHOR]

This study utilises a time-varying wavelet analysis to examine the relationship between the onshore spot market and the offshore non-deliverable forward (N.D.F.) market of the Chinese Yuan (C.N.Y.). Given the presence of structural changes in the two markets, we did not find any stable causality during the sample period. However, in some sub-samples, we found that there is a strong nonlinear causal relationship running from the onshore spot market to the offshore N.D.F. market. Ties between the two markets are closer after the widening of the onshore trading band, first in April 2012, second in March 2014 and again in August 2015. The onshore spot market is heavily influenced by interventions by the People's Bank of China (P.B.C.). These findings imply that offshore N.D.F. market development is not divorced from onshore development, as developments in the onshore spot market influence the offshore N.D.F. market. The results show that the exchange rate markets for the C.N.Y. are not efficient. Thus, to successfully internationalise the C.N.Y., financial expansion of the onshore spot market should keep pace with the growing offshore N.D.F. market to minimise destabilisation of the C.N.Y. [ABSTRACT FROM AUTHOR]

The exchange rate is one of the most monitored economic variables reflecting the state of the economy in the long run, while affecting it significantly in the short run. However, prediction of the exchange rate is very complicated. In this contribution, for the purposes of predicting the exchange rate, artificial neural networks are used, which have brought quality and valuable results in a number of research programs. This contribution aims to propose a methodology for considering seasonal fluctuations in equalizing time series by means of artificial neural networks on the example of Euro and Chinese Yuan. For the analysis, data on the exchange rate of these currencies per period longer than 9 years are used (3303 input data in total). Regression by means of neural networks is carried out. There are two network sets generated, of which the second one focuses on the seasonal fluctuations. Before the experiment, it had seemed that there was no reason to include categorical variables in the calculation. The result, however, indicated that additional variables in the form of year, month, day in the month, and day in the week, in which the value was measured, have brought higher accuracy and order in equalizing of the time series. [ABSTRACT FROM AUTHOR]

Abstract This paper investigates the inter-relationships between CNH, CNY and NDF exchange rate markets. Through Johansen co-integration test, we found there do exist long term equilibrium relationships between these markets, Then we try to use VAR model and Granger causality test to explore the detail relationships between RMB markets. [ABSTRACT FROM AUTHOR]

This paper analyzed the effect of Yuan revaluation on China's external trade performance. Using break point unit root analysis, 1994 has revealed to be the beginning of a new regime for real effective exchange rate implying that Yuan peg to US Dollar really played a central role in influencing real effective exchange rate. Though in the short run real effective exchange rate influence on trade seems unimportant, in the long run the influence is positive and economically significant. Since trade involves more than one country, growth in foreign economic activities influences China's exports growth the same way as China's economic growth influences import growth. [ABSTRACT FROM AUTHOR]

Southeast Asian currencies have been losing ground since the taper tantrum in May 2013 to an extent that goes beyond the standard explanation in yield differentials. This paper modifies the otherwise standard uncovered interest parity (UIP) relation to shed light on two mechanisms: delayed adjustment to expectation error and a risk wedge that shapes the slope of UIP. The wedge is alternatively proxied by global uncertainty, domestic fundamentals, and China's factors. Drawn on a panel sample of the five largest ASEAN economies over the period 1982Q1 to 2016Q3, we find the presence of forward discount puzzle in ASEAN-5 exchange rates against the US dollar, which cannot be explained by global uncertainty and domestic attitudes toward capital flows and exchange rate flexibility. It is China's exchange rate policy that matters, in the sense that greater flexibility in yuan-dollar exchange rates and greater US dollar weight in the renminbi's currency basket amplify regional currencies fluctuations. In view of this, any effort to stabilize regional currencies cannot afford to ignore what's going on behind the Great Wall. [ABSTRACT FROM AUTHOR]

In line with the deepening of the derivative foreign-exchange market in Hong Kong, we recover risk-neutral probability densities for future US dollar/offshore renminbi exchange rates as implied by exchange rate option prices. The risk-neutral densities (RND) approach is shown to be useful in analyzing market sentiment and risk aversion in the renminbi market. We include a forecasting exercise that confirms market participants were able to forecast the shape of the actual densities correctly for short horizons, even if their exact location could not be determined. [ABSTRACT FROM AUTHOR]

This paper examines the international spillover effects of China's monetary policy shock on macro and financial variables in 26 countries along the Belt and Road (B&R) from 2000 to 2019. We find that a surprise Chinese monetary tightening brings about a widening in the short-term interest rate spread, a drop in the equity price, nominal depreciation against the RMB and real depreciation, and an improvement in the trade balance, on average, across the 26 B&R countries. Moreover, substantial heterogeneous effects emerge in the responses of the foreign real exchange rate and the trade balance in different groups in terms of the 26 countries' trade weights with China, capital openness, and national income levels. Finally, all the empirical evidence reveals that the expenditure switching effect plays an important role in facilitating the international transmission of China's monetary policy shock. • Estimates China's monetary policy shock series via a large Bayesian VAR model. • Examines the cross-border transmission of the shock via local projections. • Finds significant spillover effects of China' monetary policy shock abroad. • Finds heterogeneities in the spillover effects for different country groups. • Finds the expenditure switching effect is key in the monetary policy transmission. [ABSTRACT FROM AUTHOR]

The internationalization of China's currency, the renminbi (RMB) bolsters the growing economic and political influence of China in the Asia-Pacific region. This paper assesses the evolution of RMB exchange rate co-movements against the US dollar (USD) within the region. While the RMB's influence is growing, it is also found to be asymmetric and varying over time depending on the global movement of the USD. The trend is strong when the USD depreciates, but fades when the USD appreciates. [ABSTRACT FROM AUTHOR]

On August 11, 2015, China revamped its procedure for setting the official central parity of the renminbi (RMB) against the US dollar. Our empirical investigation suggests that the intertemporal dynamics of China's central parity shifted after this policy change, though the deviation of the RMB offshore rate from the central parity and the US dollar index remained the two significant determinants of central parity after the policy change. In contrast, the VIX index only offered explanatory power up to August 2015. Thereafter, the onshore RMB rate and the difference between the onemonth offshore and onshore RMB forward points have significant impacts on the central parity. While the US dollar index effect remains, we find no evidence of a rate-fixing role for the RMB exchange rate against the currency basket announced by China in December 2015. [ABSTRACT FROM AUTHOR]

Movement of the renminbi (RMB) exchange rate is not only affected by economic factors, but also by political factors home and aboard. This paper analyzes the transmission mechanism of political cycles on the RMB exchange rate first, and then sets up a “political cycle spillover effect model” followed by an empirical analysis. We find that: (1) the US political cycle has a direct effect on the RMB exchange rate in the short run, which is mainly transmitted by capital flows and China’s exchange rate policy control; (2) the RMB exchange rate changes periodically in accordance with the US presidential election and midterm election cycle, with the appreciation ratio significantly lower in the first year of the election cycle, while significantly higher in the year after the midterm election; (3) The effect of the political cycle will not be affected by which party holds power, though it will be affected if the president and parliament are ruled by the same party. This paper not only extends the research of the influencing factors of the RMB exchange rate to the political field, but also sets up a use theoretical model to analyze the impact of political issues on the RMB exchange rate, providing a new perspective to fully understand the external environment of RMB exchange rate reform. [ABSTRACT FROM AUTHOR]

Import competition from China is pervasive in the sense that for many good categories, the competitive environment that U.S. firms face in these markets is strongly driven by the prices of Chinese imports, and so is their pricing decision. This paper quantifies the effect of the government-controlled appreciation of the Chinese renminbi vis-à-vis the USD from 2005 to 2008 on the prices charged by U.S. domestic producers. In a panel spanning the period from 1994 to 2010 and including up to 519 manufacturing sectors, import price changes of Chinese goods pass into U.S. producer prices at an average rate of 0.7, while import price changes that can be traced back to exchange rate movements of other trade partners only have mild effects on U.S. prices. Further analysis points to the importance of trade integration, variable markups, and demand complementarities on the one side, and to the importance of imported intermediate goods on the other side as drivers of these patterns. Simulations incorporating these microeconomic findings reveal that a substantial revaluation of the renminbi would result in a pronounced increase in aggregate U.S. producer price inflation. [ABSTRACT FROM AUTHOR]

This paper employs time series method and Dynamic Bayesian Network method to measure the pass through of RMB exchange rate to prices of different industries. The result shows that the direct transfer effect of RMB exchange rate on RMPI, CGPI and CPI is remarkable. At the same time, the RMB exchange rate can also have indirect influence on PPI, CGPI and CPI of different industries. This study indicates that wood, chemistry, textile and other labor-intensive industry prices are sensitive to the fluctuation of RMB exchange rate, while the exchange rate pass-through effects of energy, black metal, non-ferrous metals and other mineral industries prices are not significant. [ABSTRACT FROM AUTHOR]

There are various models to predict financial time series like the RMB exchange rate. In this paper, considering the complex characteristics of RMB exchange rate, we build a nonlinear combination model of the autoregressive fractionally integrated moving average (ARFIMA) model, the support vector machine (SVM) model, and the back-propagation neural network (BPNN) model to forecast the RMB exchange rate. The basic idea of the nonlinear combination model (NCM) is to make the prediction more effective by combining different models’ advantages, and the weight of the combination model is determined by a nonlinear weighted mechanism. The RMB exchange rate against US dollar (RMB/USD) and the RMB exchange rate against Euro (RMB/EUR) are used as the empirical examples to evaluate the performance of NCM. The results show that the prediction performance of the nonlinear combination model is better than the single models and the linear combination models, and the nonlinear combination model is suitable for the prediction of the special time series, such as the RMB exchange rate. [ABSTRACT FROM AUTHOR]

The offshore renminbi (CNH) exchange rate is the exchange rate of the Chinese currency transacted outside China. We study the CNH exchange rate dynamics and its links with onshore exchange rates. Using a specialized microstructure dataset, we find that CNH is significantly affected by its order flow and limit-order imbalance. The offshore CNH exchange rate has an increasing impact on the onshore rate, and significant predictive power for the official RMB central parity rate. The CNH order flow also affects the onshore RMB exchange rate and the central parity rate. The interactions between variables are likely to be time-varying. [ABSTRACT FROM AUTHOR]

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Recent empirical studies show that the Chinese currency renminbi is either becoming or has become a dominant reference currency in Asia. However, the high correlation between the US dollar and renminbi movements hampers the identification of their individual effects on the Asian currencies. In particular, the application of Frankel-Wei regressions to determine the weights of the US dollar and the (unorthogonalized) renminbi in the implicit currency baskets could suffer from endogeneity problems that produce an upward bias in renminbi's estimated weight. This paper reviews the evidence by applying country-specific Vector Autoregression (VAR) models to daily exchange rate data from nine Asian economies namely, Hong Kong, Indonesia, India, Korea, Malaysia, the Philippines, Singapore, Thailand, and Taiwan. The VAR methodology allows for mutual interaction of the exchange rate variables, thereby circumventing the simultaneity bias problem. To overcome the identification problem, we study the relationship between Asian currencies and the US dollar (renminbi) in terms of their bilateral rates against the renminbi (US dollar). All bilateral exchange rates are standardized so that the impulse responses generated are in terms of the number of standard deviations of each series, hence facilitating comparisons across the two sets of models. Generalized impulse response analysis reveals that the US dollar has a significant influence on Asian currencies before the global financial crisis but its impact has weakened post-crisis. By contrast, there is clear evidence that the role of the renminbi in Asian exchange rate determination has increased after the global financial crisis, exerting either greater or a similar impact as the US dollar. Nonetheless, our findings do not support the claim that a de facto "renminbi bloc" has emerged in the region. [ABSTRACT FROM AUTHOR]

Abstract: It is a very interesting topic to forecast the movement direction of financial time series by machine learning methods. Among these machine learning methods, support vector machine (SVM) is the most effective and intelligent one. A new learning model is presented in this paper, called the polynomial smooth support vector machine (PSSVM). After being solved by Broyden–Fletcher–Goldfarb–Shanno (BFGS) method, optimal forecasting parameters are obtained. The exchange rate movement direction of RMB (Chinese renminbi) vs USD (United States Dollars) is investigated. Six indexes of Dow Jones China Index Series are used as the input. 4 sections with 180 time experiments have been completed. Many results show that the proposed learning model is effective and powerful. [Copyright &y& Elsevier]

The article examines the appropriateness of China's dollar-based exchange rate regime. The economic characteristics of China are compared to that of Hong Kong, Macau, and Panama. The foundations of the optimum currency areas (OCA) theory are discussed. The common movement of real lending rates in recent years across all economies is explained.

The central question this paper addresses is whether internationalization of the RMB would be sufficient for the international monetary system (IMS) to provide greater stability and flexibility than today’s IMS. Whether Chinese efforts to internationalize the RMB culminate in the currency achieving reserve status will be for China to realize. The path to reserve currency status, however, is not one that the Chinese can pursue unilaterally. Internationalization entails an interaction between private and public decision-making, and is a function of private-sector confidence as much as public policy. The outcome will be the result of strategic interplay involving public policies across systemically important countries and confidence-building among global savers and investors. The paper argues that international cooperation, especially among reserve currency countries on policy frameworks to achieve the common objectives of economic growth, full employment, price stability, and sustainable fiscal positions will define a coherent and well-functioning IMS. [ABSTRACT FROM PUBLISHER]