The Impact of the US Political Pressure on RMB Exchange Rate: An Event Study Analysis

This paper takes the US as an example and uses event study approach to analyze the political events in which the US pressured RMB exchange rate between July 22, 2005 and March 31, 2016 as well as the outcomes of such actions, trying to reveal the influence of such events during the appreciation and depreciation period of RMB. The conclusions are as follows: 1) The pressure from the United States did not play a significant role in promoting RMB appreciation since only 53.4% out of 116 events between July 22, 2005 and March 31, 2016 were successful; 2) In various political events that aim at imposing pressure between July 22, 2005 and March 31, 2016, the US Congress had more significant influence on RMB exchange rate than the US administrative sectors; 3) Judging from the number of events, RMB exchange rate hasn’t undergone obviously increased pressure from the US since its devaluation in 2014. However, unlike the situation in the appreciation stage, US administrative sectors were more influential than the Congress in the devaluation stage.