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The impact of trade and financial expansion on volatility of real exchange rate

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  • Zhe Chen

Abstract

With the steady progress of China’s opening-up policy, how to avoid the financial risks brought by opening-up is a valuable research topic at present while promoting economic development. As an innovative business model connecting the real economy and the virtual economy, the Internet of Things (IoT) finance provides standardized technical support for the expansion of trade and finance. In financial data analysis, deep learning (DL) has become an important means to predict financial market movements, process text information and improve trading strategies. Analysis is conducted on the influence of trade and financial opening on the volatility of real exchange rate. Through the empirical test of panel data of 45 major countries in the world, the pooled ordinary least square (OLS) method and instrumental variable method are used to evaluate the influence of trade and financial opening of sample countries on the volatility of real exchange rate. The main conclusions are that trade openness is negatively correlated with the volatility of real exchange rate, and financial openness is positively correlated with the volatility of real exchange rate. A certain reference is provided for reducing the fluctuation of real exchange rate in the process of opening to the world.

Suggested Citation

  • Zhe Chen, 2022. "The impact of trade and financial expansion on volatility of real exchange rate," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-13, January.
    • Handle: RePEc:plo:pone00:0262230
    DOI: 10.1371/journal.pone.0262230
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    References listed on IDEAS

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    Cited by:

    1. Umar Nawaz Kayani & Ahmet Faruk Aysan & Azeem Gul & Syed Arslan Haider & Sareer Ahmad, 2023. "Unpacking the asymmetric impact of exchange rate volatility on trade flows: A study of selected developed and developing Asian economies," PLOS ONE, Public Library of Science, vol. 18(10), pages 1-16, October.
    2. Shufeng Cong & Lee Chin & Risidaxshinni Kumarusamy, 2025. "Does trade freedom affect exchange rate movement? A perspective of high-technology trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 34(3), pages 552-572, April.
    3. Jie Li & Rui Wang & Xiaotong Cai & Yansheng Chen & Chao Cao, 2025. "The game theory issues of blockchain digital ecosystem in cross-border trade," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 16(12), pages 3881-3919, December.

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