The RMB Exchange Rate Transmission Mechanism of The Fed's Interest Rate Hike and Its Impact on China's Economy
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Abstract
Under the background of the Federal Reserve Bank of the United States interest rate hike, this paper analyzes with the help of exchange rate overshoot model and interest rate parity theory, explains the change of the Fed's interest rate hike to transmit the depreciation and then appreciation of the RMB exchange rate, and answers the impact of exchange rate changes on China's economy and the impact of interest rate hikes on China's commodities, debt solvency, and real estate enterprises, and at the same time uses the theory of trilemma to explain the impact of interest rate hikes on China's benchmark interest rates. Based on this, this paper proposes to maintain the steady decline of the RMB in the short term, promote the internationalization process of the RMB, deepen China's supply-side structural reform, and develop China's economy.
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References
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