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

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

Special Issue: Financial Business Cycle

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

Citation: Yinghua Ren, Weiwen Gu. The Impact on RMB Internationalization Process: Exchange Rate Expectation and Foreign Trade. Quantitative Finance and Economics, 2017, 1(1): 114-124. doi: 10.3934/QFE.2017.1.114

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Copyright Info: © 2017, Yinghua Ren, et al., licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution Licese (http://creativecommons.org/licenses/by/4.0)

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