(A) the impact of economic growth on the RMB exchange rate

No matter from what angle, economic growth is always the fundamental factor that determines the value of a country's currency. The reason is that if a country's economic growth rate is high and people have confidence in the good operation of the macro-economy, foreign investors will inevitably invest in the country, which will lead to an increase in the income of the country's balance of payments capital account, a strong demand for money and a natural rise in the value of money. However, it cannot be said that "rapid economic growth will bring about currency appreciation, while stagnant or declining economic growth will devalue the currency". In fact, the influence of economic growth on exchange rate can be analyzed from two aspects: (1) In the take-off stage of a country's economy, due to the low level of productivity, economic development presents the characteristics of extensive management, and with the high inflation rate, the domestic general price level rises, thus the domestic currency falls, that is, the exchange rate rises. This is consistent with the rapid economic growth of China and the depreciation of RMB during the period of 198 1- 1994. (2) A country's economy is relatively mature. When the economy grows faster, the output will inevitably increase faster, which makes it have more supply than before, including more exports. Although the demand of consumers increases with the increase of income, Keynes's law of diminishing marginal propensity to consume shows that the growth of consumer demand cannot keep up with the growth of output supply, so in the period of rapid economic growth, the demand of supply relative to consumption is strong, which has downward pressure on prices. This makes the pressure of RMB appreciation appear with the economic growth of China since 1995.

(B) the impact of international payments and foreign exchange reserves on the RMB exchange rate

The formation of foreign exchange market can not be separated from international trade and investment, and the balance of payments is the sum of various payments in a country's foreign economic activities. Under the floating exchange rate system, market supply and demand determine the change of exchange rate, so the balance of payments deficit will cause the local currency to depreciate and the foreign currency to appreciate, that is, the foreign exchange rate will rise. On the contrary, the balance of payments surplus leads to the decline of foreign exchange rate. Since the current account balance and capital account balance in the balance of payments are not only the main factors affecting the balance of payments, but also the important factors affecting foreign exchange reserves, we will choose the current account balance and capital account balance as analysis indicators to reveal the impact of the balance of payments on the RMB exchange rate. First, the impact of current account on RMB exchange rate. With the expansion of foreign trade scale, the current account surplus has remained at a high level in recent years, which has potentially formed the pressure of RMB appreciation. Second, the impact of capital account on China's exchange rate. The reduction of a country's foreign exchange reserves means that the demand in the foreign exchange market is greater than the supply, and the domestic currency is under the pressure of depreciation. The increase in reserves means that the supply in the foreign exchange market exceeds the demand, and the local currency is under pressure to appreciate. Through analysis, it is found that there is a high correlation between capital account and foreign exchange reserves (0.65). At the same time, the increase in foreign exchange accounts for a sharp increase in the money supply, which puts some pressure on the country's macroeconomic operation and inflation.

(C) the impact of money supply on the RMB exchange rate

RMB exchange rate is positively related to China's money supply. With the deepening of reform and opening-up, foreign investors can not only take advantage of China's cheap labor, but also value China's huge domestic market. As a result, foreign investment has increased significantly. Due to the tight monetary policy, RMB funds are quite tight and foreign capital enters more, so the supply of foreign exchange obviously exceeds demand, which leads to the appreciation trend of RMB.

(D) the impact of interest rate differences between China and foreign countries on the RMB exchange rate

Interest rate policy is an important monetary policy tool of a country. Interest rates affect the exchange rate in many ways. The relative level of interest rate will affect the direction of capital flow, which is one of the important ways. Higher interest rates will stimulate international capital inflows and reduce domestic capital outflows. Thereby affecting the scale of international trade and increasing the impact of interest rate differences on exchange rate trends.

Second, the impact of RMB exchange rate appreciation on China's economy.

(A) the favorable impact of RMB exchange rate appreciation on the economy of China

The impact of exchange rate changes on the economy is multifaceted. The beneficial effects of RMB exchange rate appreciation are mainly manifested in three aspects: first, it stimulates the increase of imports, the appreciation of RMB exchange rate, and the prices of foreign consumer goods and means of production are cheaper than before, which is conducive to reducing import costs; Second, it is conducive to improving the environment for attracting foreign investment. The appreciation of RMB exchange rate can increase the profits of foreign-funded enterprises that have invested in China, thus enhancing investors' confidence and prompting them to further invest or reinvest; The appreciation of RMB exchange rate will attract a large amount of foreign investment into China's capital market, and the proportion of indirect investment will further increase. Third, it is conducive to reducing the pressure of debt repayment. With the rise of RMB exchange rate, the amount of local currency required for servicing outstanding foreign debts decreased accordingly, thus reducing the foreign debt burden to some extent.

(B) the adverse impact of RMB exchange rate appreciation on China's economy

1. Restrain export growth

After the appreciation of RMB exchange rate, the cost of export enterprises will increase accordingly. Price protection in the international market

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