The Influence of RMB "Entering the Basket" on RMB Value and Exchange Rate Fluctuation

Guangdong Gu (), Hui Li () and Lu Wang ()
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Guangdong Gu: Chongqing Normal University
Hui Li: Chongqing Normal University
Lu Wang: Chongqing Normal University

A chapter in Proceedings of the 2022 4th International Conference on Economic Management and Cultural Industry (ICEMCI 2022), 2023, pp 289-299 from Springer

Abstract: Abstract Based on the research background of RMB joining SDR currency basket, this paper adopts synthetic control method and GARCH model to study the impact of RMB joining SDR currency basket on RMB value and exchange rate fluctuation. The findings are as follows: Compared with not to join the SDR, the renminbi to join the SDR reduces the degree of depreciation, its role in the stability have a suit period, then the market mechanism will make the RMB exchange rate back to normal levels. In addition, to join the SDR to make the RMB against the dollar is affected by the external shocks are lower, but its exchange rate volatility of the renminbi memory enhancement effect is not obvious, indicating that the renminbi to join the SDR on the fluctuation of exchange rate is not the direct result of new RMB in the SDR allocation, but a representation of indirect effect.

Keywords: The SDR; The value of the RMB; RMB exchange rate fluctuations; RMB internationalization; Synthetic control method (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-098-5_35

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DOI: 10.2991/978-94-6463-098-5_35

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