IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v54y2018i13p3100-3116.html
   My bibliography  Save this article

The Onshore–Offshore Exchange Rate Differential, Interest Rate Spreads, and Internationalization: Evidence from the Hong Kong Offshore Renminbi Market

Author

Listed:
  • Yinghua Ren
  • Lin Chen
  • Ye Liu

Abstract

This article investigates the linkages among the onshore–offshore exchange rate differential, interest rate spreads, and Hong Kong’s RMB deposits (a proxy for RMB internationalization), based on a structural vector autoregression model. We find that this differential and the spreads have significant effects on Hong Kong’s RMB deposits, but the rise in the spreads will lead to a decline in offshore RMB deposits in Hong Kong. The differential is a stronger factor than spread shocks in explaining fluctuations in Hong Kong’s RMB deposits. Moreover, an analysis of sources of the divergence in the differential and spreads finds several economic variables that are the significant and main factors.

Suggested Citation

  • Yinghua Ren & Lin Chen & Ye Liu, 2018. "The Onshore–Offshore Exchange Rate Differential, Interest Rate Spreads, and Internationalization: Evidence from the Hong Kong Offshore Renminbi Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(13), pages 3100-3116, October.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:13:p:3100-3116
    DOI: 10.1080/1540496X.2018.1429262
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2018.1429262
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2018.1429262?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael Melvin & Frank Westermann, 2022. "Chinese Exchange Rate Policy: Lessons for Global Investors," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(1), pages 145-168, February.
    2. Chunming Shen, 2022. "Digital RMB, RMB Internationalization and Sustainable Development of the International Monetary System," Sustainability, MDPI, vol. 14(10), pages 1-22, May.
    3. Fengming Qin & Junru Zhang & Zhaoyong Zhang, 2018. "RMB Exchange Rates and Volatility Spillover across Financial Markets in China and Japan," Risks, MDPI, vol. 6(4), pages 1-26, October.
    4. Ding, Shusheng & Cui, Tianxiang & Zhang, Yongmin, 2020. "Incorporating the RMB internationalization effect into its exchange rate volatility forecasting," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:54:y:2018:i:13:p:3100-3116. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.