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Purpose: The experience of rising trade imbalance between Nigeria and its key trading partners in recent years motivated this study. Previous studies on this issue either ignored bilateral level or assumed that the effect of crude oil price and/or exchange rate changes on trade balance is symmetric. Consequently, this study investigates whether Nigeria's bilateral trade balance with Belgium, China, United Kingdom (UK) and USA is responding symmetrically or asymmetrically to changes in oil price and exchange rate. Design/methodology/approach: The authors used nonlinear autoregressive-distributed lag (NARDL) model that decomposed oil price and exchange rate into partial sum processes of positive and negative changes over the period 1999Q1–2019Q4. Findings: The study finds that the effects of oil price hike and plunge asymmetrically influence Nigeria's trade balance with the UK and USA. Further evidence indicated that oil price plunge exerts greater influence than price hike in all the cases, except the UK in the long run. Furthermore, Nigeria's trade balance responds asymmetrically and significantly to changes in exchange rate with China in the long run and with China and the UK in the short run. Specifically, the depreciation effect is more prominent than appreciation. Originality/value: Significant contributions to the existing literature in Nigeria include the recognition that the effects of oil price and exchange rate changes on trade are asymmetric and the disaggregation of trade into bilateral level to identify country-specific effect. [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 analysed the impact of appreciation of the renminbi (RMB) on China's outward foreign direct investment (OFDI) on a theoretical and empirical basis. Based on theoretical analysis, we found that the appreciation of RMB can promote OFDI, as it can lower the threshold for foreign direct investment. Then, by constructing export-weighted effective exchange rates, we found that for every 1% appreciation of the RMB, the probability of enterprises engaging in OFDI increased by 0.0069 over 2001–2012. [ABSTRACT FROM AUTHOR]

The China-specific currency market framework of 'one currency, two markets' provides us with a unique natural experiment to investigate how the active offshore exchange rate frequently diverges from the onshore exchange rate. From an interdisciplinary perspective, we propose a methodological framework that first establishes four convexity–concavity indicators, and then employ time series clustering/segmentation techniques to explore the evolutionary patterns of the onshore and offshore Renminbi exchange rates from 2 May 2012 to 29 December 2017. The empirical results show that the methodology is able to recognize five scenarios in which the exchange rates behave in an unsupervised manner, arriving at a diagnosis of the evolutionary patterns for these two markets. The estimated inverse covariance matrices and the associated graphical representations highlight the assembled timestamps of clustering assignments and reveal time-invariant structures of the market state, with all the most relevant dependencies directly interconnected in these two markets. It also suggests that intervention operations should take into account investor attention, varying arbitrage opportunities for market participants in both markets. [ABSTRACT FROM AUTHOR]

The aim of this study is to examine the dynamic relationship between Bitcoin and major foreign exchange rates namely Euro, British Pound, Canadian Dollar, Japanese Yen, and Chinese Yuan. In this context, we employ the causalityin- mean and variance test suggested by Hong (2001) to examine the presence of mean and volatility spillover effects between Bitcoin and foreign exchange rates. Also, we use the causality-in-risks test proposed by Hong et al. (2009) to investigate the existence of tail dependence between Bitcoin and foreign exchange rates. By using daily data from August 19, 2011, through August 6, 2021, we find unidirectional Granger causality-in-mean from Euro, Pound, and Dollar to Bitcoin. On the other hand, causality-in-variance test results suggest a bidirectional volatility spillover effect between Bitcoin and Euro and Pound. Also, Yuan and Dollar are found to be Granger cause-in-variance of Bitcoin. Causality-in-risk test results provide evidence in favor of causal link running from Euro and Pound to Bitcoin. In addition, unexpected losses in Bitcoin are the Granger cause of unexpected losses in the Yen. Overall, our empirical analysis results show that the Chinese currency market seems to be less integrated with Bitcoin. [ABSTRACT FROM AUTHOR]

This study tested whether pandemic-induced fear is a predictor of the exchange rate returns of seven major currencies – Australian dollar, Canadian dollar, Swiss franc, yuan, EURO, pound sterling, and yen. Daily data on US dollar-based exchange rate returns and the global fear index for COVID-19 pandemic for the period 10-02-2020–02-04-2021 were used. Symmetric and asymmetric wild bootstrap likelihood ratio tests were employed in testing the relationship. The symmetric test results showed that pandemic-induced fear is capable of predicting the exchange rate returns of the Swiss franc, yuan, and the EURO. Specifically, negative relationships were recorded between their returns and the global fear index for pandemics. The asymmetric test results however showed that increasing pandemic-induced fear leads to decreases in the returns of the Australian dollar, Canadian dollar, Swiss franc, yuan and EURO. Overall, this study showed that pandemic-induced fear is a predictor of exchange rate returns. It is therefore suggested that the maintenance of stability in the financial system should be treated as an integral part of policy responses designed to mitigate the adverse effects of pandemics. This way, economic agents will not be forced to move their investments to foreign currency-denominated assets due to fear of investment losses. [ABSTRACT FROM AUTHOR]

• Imported inputs affects the exchange rate pass-through via two channels. • Marginal cost channel serves by changing the marginal cost of export products. • Quality change channel serves by altering exporters' incentive to change quality. • These two channels generate opposite effects on the exchange rate pass-through. • The marginal cost channel dominates the quality change one for Chinese exporters. This paper examines how the use of imported intermediate inputs affects the exchange rate elasticity of export prices. We first construct a theoretical model to illustrate that a change in imported input cost followed by a change in the exchange rate affects export prices through two distinct channels: directly changing the marginal cost of export products(i.e., the marginal cost channel) and indirectly altering exporters' incentive to upgrade (or downgrade) the quality of products (i.e., the quality change channel). These two channels generate opposite effects on the exchange rate elasticity of export prices. Our empirical analyses find strong evidence of the existence of the marginal cost and quality change channels. Overall, the marginal cost effect dominates the quality change effect. The marginal cost channel is weaker for products with larger scope for quality differentiation and firms with a higher ability to upgrade quality, as predicted by the theoretical model. [ABSTRACT FROM AUTHOR]

In the context of the ongoing trade dispute between China and the United States, our study attempts to investigate the sensitivity of global commodity prices to the appreciation and depreciation of renminbi (RMB). Using quarterly data of 1994–2016, we reach three notable findings based on linear and non-linear specifications of autoregressive distributed lag (ARDL) model. First, the global price for selected agricultural commodities is sensitive to the appreciation of RMB, exercising downward pressure on agricultural commodity markets. Second, the global price for crude oil is found to react negatively to real appreciation of RMB. Third, the global price for selected metal commodities is found to respond negatively to changes in RMB. Based on these findings, we suggest China adopts a one-off appreciation instead of tariffs on imported commodities to prevent the fluctuation of commodity prices and realize the self-sufficiency goal. [ABSTRACT FROM AUTHOR]

This paper modified the Diebold & Yilmaz spillover index model by weighting method, and used this model to analyze the information spillover relationship between RMB and seven major developed contries, currency from July 22, 2005 to the end of 2017. The results showed that: The current international influence of the RMB is not high, far lower than the influence levels of other developed countries' currencies, but it shows a rising trend; especially after the "811" exchange reform in 2015, the international influence of the RMB has been greatly improved; from the rolling window analysis and structure change-point test, the improvement of the marketization level of the RMB exchange rate formation mechanism and international status are two main factors that have led to major changes in the international influence of the RMB. Overall, the weighted modified Diebold & Yilmaz spillover index model can more sensitively reflect changes in the international influence of the RMB. To improve the international influence of the RMB, one key is to continuously increase the marketization level of the exchange rate market. [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]

The aim of the study is to analyze volatility spillovers and transmission among the U.S. Dollar, the Euro, the Yuan and the Yen within the framework of currency wars. Towards to the purpose of the study, we use the daily dataset that covers the period 20.03.2012- 28.09.2018 and volatility spillovers among exchange rates are investigated with Dynamic Correlation Multivariate Stochastic Volatility (DC-MSV) model. According to the results, there exists volatility transmission among the exchange rates in case of currency wars. Also considering the results of the amount of volatility transmission, the determinant currency markets are Yuan, Euro, the U.S. Dollar and Yen, respectively. The Yuan is the most powerful currency market and the Yen is the weakest currency market in the currency wars. [ABSTRACT FROM AUTHOR]

Using multifractal detrended cross-correlation analysis (MF-DCCA), this research investigates the dynamic relationship between the RMB exchange index and the liquidity of the Shanghai and Shenzhen stock market during the period from 22 June 2010 to 17 February 2017. As suggested by our empirical results, the well-known efficient market hypothesis by no means explains the dynamics between the RMB index and stock market liquidity. Indeed, the RMB index and stock market liquidity are cross-correlated, and the cross-correlations exhibit multifractal features. Further, cross-correlations between the RMB index and the liquidity of the Shanghai and Shenzhen stock market demonstrate strong and positive persistence. In particular, the positive persistence of cross-correlations is strengthened in the presence of a tightening monetary policy. [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]

China has experienced a rapid integration into Global Value Chains and a decade long appreciation of its exchange rate. However, these trends have been analysed largely in isolation from each other. In this paper, we explore the linkages between the two based on interviews with a sample of firms in Jiangsu Province. We show (1) how the distribution of the costs and benefits of exchange rate appreciation depends on the power hierarchies between firms in GVCs; (2) how exchange rate changes are important drivers of upgrading and even downgrading in GVCs; and (3) that the firm heterogeneity evident in GVCs provides additional insights into the politics of exchange rate determination in China. [ABSTRACT FROM AUTHOR]

This article considers the detection of changes in persistence in heavy-tailed series. We adopt a Dickey–Fuller-type ratio statistic and derive its null asymptotic distribution of test statistic. We find that the asymptotic distribution depends on the stable index, which is often typically unknown and difficult to estimate. Therefore, the block bootstrap method is proposed to detect changes without estimating κ. The empirical sizes and power values are investigated to show that the block bootstrap test is valid. Finally, the validity of the method is demonstrated by analyzing the exchange rate of RMB and US dollars. [ABSTRACT FROM AUTHOR]

This study analyzes how Renminbi (RMB) internationalization policies affect RMB exchange rates between 2010 and 2016 using the VAR (Vector Auto-Regressive) model. The results show that many RMB internationalization policies have distinct impacts on the central parity rate, onshore exchange rate, and offshore exchange rate. Policies have the greatest effect on the offshore exchange rate, followed by the onshore rate, and the central parity rate. Further, changes in the RMB exchange rates can be divided into three stages. In the first stage, as the onshore exchange rate was subjected to the daily trading band at 0.5% around the central parity rate, the onshore exchange rate converged toward the central parity rate. Then, after the central bank widened the band of the onshore exchange rate on April 16, 2012, the onshore exchange rate followed the trend of the offshore exchange rate. After the 811 exchange reform in 2015, the central parity rate dominated the pricing power again. [ABSTRACT FROM PUBLISHER]

This paper employs multifractal detrended analysis (MF-DFA) and multifractal detrended cross-correlation analysis (MF-DCCA) to study cross-correlation behaviors between China’s RMB exchange rate market and four international commodity markets, using a comprehensive set of data covering the period from 22 July 2005 to 15 March 2016. Our empirical results from MF-DFA indicate that the RMB exchange rate is the most inefficient among the 4 selected markets. The results from quantitative analysis have testified the existence of cross-correlations and the result from MF-DCCA have further confirmed a strong multifractal behavior between RMB exchange rate and international commodity markets. We also demonstrate that the recent financial crisis has significant impact on the cross-correlated behavior. Through the rolling window analysis, we find that the RMB exchange rates and international commodity prices are anti-persistent cross-correlated. The main sources of multifractality in the cross-correlations are long-range correlations between RMB exchange rate and the aggregate commodity, energy and metals index. [ABSTRACT FROM AUTHOR]

The article analyzes the resumption of China's exchange rate reform from June 2010. It finds that, while the Congress's influence on the RMB issue generally diminished over time after the global financial crisis, international criticism and pressure from the US administration and the IMF still played an important role of agenda-setting in China's exchange rate policy-making in 2010. The Chinese leadership stood firm to the external pressure and demonstrated solidarity and consistency towards the exchange rate policy. It argues that, with the development of RMB internationalization and increasing capital account openness, a flexible exchange rate was the feasible choice to preserve the independence and effectiveness of China's monetary policy, which produced the Chinese leadership's consensus on the RMB exchange rate reform in 2010. The RMB appreciated steadily and gradually against the dollar in the second round of exchange rate reform, aiming to improve confidence and promote the international use of RMB. [ABSTRACT FROM AUTHOR]

This paper examines the policy challenges and dilemmas faced by China's authorities in balancing exchange rate stability with the policy necessity of monetary autonomy. China will have to move toward greater exchange rate flexibility, particularly as the capital account becomes increasingly liberalized and the government pushes forward with RMB internationalization. [ABSTRACT FROM AUTHOR]

With China’s economic rise and in particular its massive international trade surplus with the rest of the world, the exchange rate of its currency has come under increasing scrutiny in the new millennium. Based on a critical review of existing International Political Economy (IPE) theoretical approaches on exchange rate politics – theInnenpolitikapproaches and the international-domestic interaction approach – this paper argues that two-level game theory is a suitable tool for explaining the development of China’s exchange rate policy. By specifically examining the external factors and domestic sources of China’s exchange rate policy, this paper develops a complete analytical framework in which China’s central decision makers are understood to strive to reconcile international pressures and domestic bargainers when making decisions on exchange rate policy. After offering a theoretical review, revision and synthesis, the paper provides an empirical study of China’s 2005 exchange rate reform to specifically show how international factors played an agenda-setting role in China’s exchange rate policy making and how China’s domestic politics determined the pathway of the exchange rate reform in July 2005. [ABSTRACT FROM PUBLISHER]

In this paper, we investigate the cross-correlations between the Hang Seng China Enterprises Index and RMB exchange markets on the basis of a cross-correlation statistic test and multifractal detrended cross-correlation analysis (MF-DCCA). MF-DCCA has, at best, serious limitations for most of the signals describing complex natural processes and often indicates multifractal cross-correlations when there are none. In order to prevent these false multifractal cross-correlations, we apply MFCCA to verify the cross-correlations. Qualitatively, we find that the return series of the Hang Seng China Enterprises Index and RMB exchange markets were, overall, significantly cross-correlated based on the statistical analysis. Quantitatively, we find that the cross-correlations between the stock index and RMB exchange markets were strongly multifractal, and the multifractal degree of the onshore RMB exchange markets was somewhat larger than the offshore RMB exchange markets. Moreover, we use the absolute return series to investigate and confirm the fact of multifractality. The results from the rolling windows show that the short-term cross-correlations between volatility series remain high. [ABSTRACT FROM AUTHOR]

Since the Asian financial crisis of 1997–1998, China has significantly increased its foreign exchange reserves. We argue that the resulting abnormal levels of currency reserves accumulated by Chinese authorities are not intended to maximize the citizenry’s economic welfare, as in a mercantilist or a precautionary account, but rather to forestall the elite’s own political demise. This goal has been pursued mainly by generating large current account surpluses through manipulation of the renminbi exchange rate. The Chinese elite has sought to promote the acceptance of this policy by influencing the costs of collective action taken by winners and losers. [ABSTRACT FROM AUTHOR]

In the paper, we research on the characteristics of RMB exchange rate time series fluctuation with methods of symbolization and coarse gaining. First, based on fluctuation features of RMB exchange rate, we define the first type of fluctuation mode as one specific foreign currency against RMB in four days’ fluctuating situations, and the second type as four different foreign currencies against RMB in one day’s fluctuating situation. With the transforming method, we construct the unique-currency and multi-currency complex networks. Further, through analyzing the topological features including out-degree, betweenness centrality and clustering coefficient of fluctuation-mode complex networks, we find that the out-degree distribution of both types of fluctuation mode basically follows power-law distributions with exponents between 1 and 2. The further analysis reveals that the out-degree and the clustering coefficient generally obey the approximated negative correlation. With this result, we confirm previous observations showing that the RMB exchange rate exhibits a characteristic of long-range memory. Finally, we analyze the most probable transmission route of fluctuation modes, and provide probability prediction matrix. The transmission route for RMB exchange rate fluctuation modes exhibits the characteristics of partially closed loop, repeat and reversibility, which lays a solid foundation for predicting RMB exchange rate fluctuation patterns with large volume of data. [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]

This article examines the importance of the U.S. dollar relative to other currencies in determining the renminbi value before and after an announcement of the exchange rate regime change by the People’s Bank of China. Test results reveal a discernible change in the exchange rate regime after the announcement and varying, yet dominant, weights of the U.S. dollar in the specified currency basket during postannouncement periods. Additionally, the presence and magnitude of the U.S. dollar weight in the long run appear to be related to the extent to which the renminbi fluctuates in the short run against the U.S. dollar. [ABSTRACT FROM AUTHOR]

This paper examines the effectiveness of the RMB regime reforms on market efficiency improving for the mainland onshore market and Hong Kong offshore market. Based on multifractal detrended fluctuation analysis (MF-DFA), we study the multifractal properties as well as multifractality degree of RMB/USD and RMB/HKD exchange markets. Our empirical results show that, the first RMB regime reform undertaken on July 21, 2005 has a greater impact on RMB/USD exchange market in the short term, while the second RMB exchange reform undertaken on June 19, 2010 exerts the long-term influences on the efficiency of both RMB/USD and RMB/HKD markets. Further, RMB/HKD market is found to work more efficiently, although both mainland onshore market and Hong Kong offshore market have achieved a higher level of efficiency post reforms. [ABSTRACT FROM AUTHOR]

China's currency, the renminbi or yuan, is not freely convertible on international foreign exchange markets; foreign exchange is still heavily controlled in China even though major reforms swept the Chinese foreign exchange control regime in 2005. Whilst foreign exchange liberalisation reform is underway, uncertainties exist and the market has to have a second guess how further reform will move forward and whether the government will make a policy U-turn at a certain point. These uncertainties increase transaction costs and hinder China's deeper financial reform. [ABSTRACT FROM AUTHOR]

This paper utilizes the heterogeneous common factor models to investigate the asymmetric impacts of RMB exchange rate on the exports based on the export data classified by HS 2 digits from January 2001 to December 2008. The results show that the impacts of RMB exchange rate on Chinese exports vary with the exports of processing commodities. The appreciation of RMB will have a negative effect on the exports with small proportion of processing commodities. However, this negative impacts will decrease when the proportion of export on processing commodities increases. This paper also explains why the RMB5s appreciation has a positive impact on Chinese export and a large number of firms find it hard to operate. [ABSTRACT FROM AUTHOR]

By introducing a bandwidth parameter, this paper proposes a moving kernel-weighted variance ratio statistic to monitor persistence change in time series with deterministic trend in terms that the existing kernel-weighted variance ratio statistic is not consistent when time series switch from nonstationary to stationary. Under the nonstationary null hypothesis we derive the limiting distribution of monitoring statistic, and tabulate some critical values. We also prove its consistency under the alternative hypothesis. Simulations indicate that the new procedure has higher empirical power and shorter average run length than the existing procedures in the literature. Finally, the validity of the new procedure is demonstrated by analyzing the foreign exchange rate dada of Chinese Yuan and U.S. dollars. [ABSTRACT FROM AUTHOR]

Unlike the depth of international political economy (IPE) research on finance and money in North America and Britain/Europe, or the amount of work that has been done inside China on the IPE of international trade, the IPE of global finance and money is still at a nascent stage inside China. The paper examines the evolution of Chinese IPE research on global finance and money and suggests that research in these issue areas appears to be reaching a turning point. The main empirical finding is that this shift in knowledge production has been induced principally by China's emergence as a financial force and the national developmental concerns this entails, as well as by the onset of the 2008–09 global financial crisis and the rise of the emerging economies’ grouping. The growing Chinese scholarship on the IPE of finance and money is adding analytical depth and broadening Chinese IPE, particularly on the impact of financial globalization on developing and emerging economies. While such research will likely contribute to Chinese policymaking in the future, the scholarly test for Chinese IPE is whether and how it will contribute to filling the global knowledge gaps on the determinants of financial and monetary policy, and whether it will give rise to new understandings on global finance and money, especially the causes of international financial crises. Heretofore, much of the literature has been heavily policy-oriented and normative. [ABSTRACT FROM PUBLISHER]

Abstract: This paper analyzes the ex-ante short-term impacts of the Chinese RMB appreciation on the Chinese and world economy, using a novel approach of modeling nominal exchange rate adjustment in the GTAP, a global CGE model. Scenario results show that Chinese economy will be affected negatively, with lower real GDP, lower employment rates, and a decline in the trade surplus. Chinese currency appreciation has positive impact on the GDP of the major countries and regions, although by a small margin. With higher Chinese exchange rate, trade balance for other trading partner countries improves with the exception of the U.S. [Copyright &y& Elsevier]

The emergence of China as a powerhouse of the world economy has added a new dimension to the global currency market. China’s impressive economic growth and phenomenal rise in exports have given considerable strength to its currency yuan in recent years. To what extent will China push to make the yuan the world’s reserve currency has become a burning issue. Currently, the share of yuan in total world reserves is hardly 1 per cent. The reasons are obvious. The yuan is not fully convertible, the capital market is shallow, the exchange rate is not flexible and international acceptance of yuan as a store of value is non-existent. In the face of these constraints, China is showing an inclination to make the yuan an international currency and to rival the US dollar and euro. Increase in the inflow of foreign direct investment as well as outflow of investment abroad is enabling China to move towards internationalisation of yuan in the near future. Regionalisation of the yuan is gaining importance with rise in its international trade in Asia. China has now allowed the commercial banks in Hong Kong to accept the yuan-denominated deposits. It is further extending loans in yuan to developing countries. Many steps are being taken towards making the yuan an international reserve currency. At the outset, it appears that the yuan would become an international currency in the foreseeable future. [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]

By taking into account balance of payments and demand for foreign exchange reserves, this article constructs a theoretical model to analyze the effects of RMB exchange rate volatility on the fluctuation of foreign exchange reserves. And then this article also investigates the effects of the nominal effective exchange rate volatility and real effective exchange rate volatility on the foreign exchange reserve. The results of theoretical model show that the effects of scale variable, propensity to import, foreign income and exchange rate on foreign exchange reserves depend on the their effects on n, the certain part of instant changes of foreign exchange reserves respectively. The empirical results show that, in the long run, scale variable, propensity to import, nominal effective exchange rate and real effective exchange rate have significantly positive effects on foreign exchange reserves while the effects of reserve volatility, real effective exchange rate volatility and exchange rate regime are significantly negative. The effects of foreign income, real interest rate difference between China and the US and nominal effective exchange rate volatility are not significant. In the short run, nominal effective exchange rate volatility and real effective exchange rate have significantly negative effects on the change of foreign exchange reserves, and the effect of foreign income is significantly positive while the effects of other variables are not significant. [ABSTRACT FROM AUTHOR]

Using daily equity price data, we find that most of the 14 Chinese listed banks are highly exposed to the RMB/USD exchange rate. By breaking our data period into two subperiods around the financial crisis, we find that Chinese banks were even more exposed in the post-crisis period, despite the fact that the renminbi reverted to a de facto peg against the dollar in September 2008. This cannot be explained by direct foreign exchange exposure, and we argue that China's banks are subject to substantial indirect exposure as a result of concerns about their loan books in the face of anticipated further appreciation of the RMB. We also find that the exchange rate sensitivities of the twin shares of dual-listed Chinese banks (those listed in China and Hong Kong) are very different - not only in magnitude but also in sign. We discuss two possible explanations for this: investor sentiment and 'hot money' inflows into China. [ABSTRACT FROM AUTHOR]

This paper focuses on recent events which include the RMB reform in China and the global financial crisis to investigate statistically recent diverging trends among East Asian currencies. For the purpose, their weighted average value (Asian Monetary Unit: AMU) and their deviations (AMU Deviation Indicators) from benchmark levels are used to analyze both β and σ convergences of East Asian currencies. Our analytical results show that the monetary authority of China has still kept stabilizing the exchange rate of the Chinese yuan against only the US dollar even though it announced its adoption of a managed floating exchange rate system with reference to a currency basket. Analytical results on β and σ convergences show that deviations among the East Asian currencies have been diverging in recent years, especially after 2005. The widening deviations reflect not the RMB reform but recent international capital flows and the global financial crisis. In addition, it is important as its background that the monetary authorities of the countries are adopting a variety of exchange rate systems. In other words, a coordination failure in adopting exchange rate systems among these monetary authorities increases volatility and misalignment of intra-regional exchange rates in East Asia. [ABSTRACT FROM AUTHOR]

The article discusses China's currency, the renminbi (RMB), and the role it plays in the context of the global economy. The author examines three important issues related to the RMB in 2008 including the direction of the exchange rate in the near term, the medium-term convertibility of the RMB, and the global role of the RMB in the future. The expansion of China's economy has attracted the attention of policymakers and investors to the RMB, the article indicates. Other topics include currency reforms in China and flexible exchange rates.

Abstract: This study uses a computational general equilibrium model to examine the effects of the Chinese currency on the consumption, investment, trade, output, and welfare of different countries or regions. The results indicate a general decline in welfare across the globe. China is the biggest loser, with a reduction in output. Its domestic interest rate is likely to decline, leading to a potential liquidity trap. The policy implication of this research is that China should minimize changes in its currency value in the short run. [Copyright &y& Elsevier]

Since 2003 China has faced increasing pressure, especially from the US and Japan, to revalue the renminbi. In July 2005 China responded by announcing a small revaluation and a switch from a dollar peg to a tightly managed float against a currency basket. The mainstream economic debate, which we briefly review, has focused on whether, and to what extent, the renminbi is undervalued. From a political economy perspective, however, the more interesting question is why China has been so reluctant to significantly revalue the renminbi especially since it was keen to prove itself a ‘responsible member of the international community’ by not devaluing in the wake of the Asian financial crisis in 1997–1998. We argue that this can be explained by three factors. These are, firstly, the diminished ability of China's policy-makers to use the export tax rebate policy to mitigate the effects of a revaluation. Secondly, there are differences in the regional context between the two time periods. Thirdly, in the international game of ‘problem assignment’, China refuses to accept that the US trade deficit is its ‘problem’. [ABSTRACT FROM AUTHOR]

The article focuses on controversies surrounding China's currency regime and the exchange rate for the renminbi (RMB). Based on the underlying balance and global payments approaches to assessing the equilibrium value of RMB, it remains significantly undervalued on a real, trade-weighted basis. There are arguments about the serious economic implications of an RMB revaluation. The People's Bank of China announced that China was revaluing the RMB with respect to the U.S. dollar by 2 percent on July 21, 2005.