Author(s)

Jiayu Meng

Corresponding Author

Jiayu Meng

ABSTRACT

With the acceleration of the socialization process, the relationship between countries is getting closer and closer. A large amount of international capital begins to flow into China, and the fluctuation of RMB exchange rate and the fluctuation of inflation become more frequent. This paper makes an empirical analysis of the impact of RMB exchange rate fluctuations on China's inflation. The results show that the exchange rate fluctuation has a negative correlation with China's inflation, but the degree of impact is small and there is a time lag, and the exchange rate fluctuation has an incomplete transmission to China's inflation. China should continue to promote the process of exchange rate marketization, continuously improve the exchange rate formation mechanism, and effectively control inflation in combination with other relevant policies such as fiscal policies.

KEYWORDS

Exchange rate fluctuation, inflation, pass-through effect, empirical study