Central bank swap arrangements, exchange rate volatility, and China’s exports

Zhuqing Liu and Junmei Zhang

Journal of Multinational Financial Management, 2025, vol. 79, issue C

Abstract: This paper investigates the impact of bilateral currency swap arrangements (BSAs) implemented by the People's Bank of China (PBoC) on China’s export from the perspective of stabilizing exchange rate volatility, utilizing annual trade data from 2009 to 2019. We find a significant positive effect of BSAs on China’s exports to the countries that have signed BSAs by stabilizing bilateral exchange rate volatility. The PBoC’S BSAs can reduce currency exchange costs, accelerate the RMB internationalization and enhance international market confidence in the RMB. The heterogeneity analysis further demonstrates stronger treatment effects among: (1) non-Belt and Road Initiative participants, (2) APEC member states, (3) developing economies, and (4) countries without a floating exchange rate regime.

Keywords: Bilateral currency swap arrangements; Exchange rate volatility; China’s exports; Belt and road initiative; Renminbi internationalization (search for similar items in EconPapers)
JEL-codes: F33 F36 G20 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:79:y:2025:i:c:s1042444x25000192

DOI: 10.1016/j.mulfin.2025.100915

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