What Influence the Exchange Rate of RMB after the Outbreak of Covid-19?

Shaoting Zhu ()
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Shaoting Zhu: Hangzhou New Channel

A chapter in Proceedings of the 2023 International Conference on Economic Management, Financial Innovation and Public Service (EMFIPS 2023), 2024, pp 320-329 from Springer

Abstract: Abstract This article studies the trend and influencing factors of the exchange rate of RMB since the outbreak of the Covid-19 in 2020. Since the outbreak of the Covid-19, the RMB exchange rate has experienced a wide range of fluctuations. This article first summarizes the relevant literature about the determinants of exchange rate, and based on the literature, this paper studies the reasons for why the RMB exchange rate fluctuations since the epidemic. In the literature, the influencing factors of exchange rates includes, the purchasing power of currency, the expected return on monetary deposits, or interest rates and international balance. By studying interest rates and data on economic growth, imports and exports, and interest rates between China and the United States, this article finds that the strong performance of the RMB in 2021 was driven by China’s strong economic performance and international trade. However, the depreciation of the RMB after 2022 is the result of the increasing of interest rates in the United States and the sluggish Chinese economy. Although the IMF has some expectations for the recovery of China’s national economy, the magnitude of the recovery has not yet returned to its peak in 2021. Therefore, for the recovery of the value of the Chinese yuan, we still need to wait for the end of the Federal Reserve’s interest rate hike cycle and the stable recovery of the Chinese economy.

Keywords: Exchange Rate; Interest Margin; Foreign Trade (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-441-9_29

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DOI: 10.2991/978-94-6463-441-9_29

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