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Central bank swap arrangements, exchange rate volatility, and China’s exports

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  • Liu, Zhuqing
  • Zhang, Junmei

Abstract

This paper investigates the impact of bilateral currency swap arrangements (BSAs) implemented by the People's Bank of China (PBoC) on China’s export from the perspective of stabilizing exchange rate volatility, utilizing annual trade data from 2009 to 2019. We find a significant positive effect of BSAs on China’s exports to the countries that have signed BSAs by stabilizing bilateral exchange rate volatility. The PBoC’S BSAs can reduce currency exchange costs, accelerate the RMB internationalization and enhance international market confidence in the RMB. The heterogeneity analysis further demonstrates stronger treatment effects among: (1) non-Belt and Road Initiative participants, (2) APEC member states, (3) developing economies, and (4) countries without a floating exchange rate regime.

Suggested Citation

  • Liu, Zhuqing & Zhang, Junmei, 2025. "Central bank swap arrangements, exchange rate volatility, and China’s exports," Journal of Multinational Financial Management, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:mulfin:v:79:y:2025:i:c:s1042444x25000192
    DOI: 10.1016/j.mulfin.2025.100915
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    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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