Dynamic Correlation between the RMB Exchange Rate and China's Import and Export Trade before and after the COVID-19 Pandemic

This research employs data on the real effective exchange rate of the Renminbi, alongside aggregate import and export statistics, to construct a vector autoregression model. The objective of this investigation is to look into the dynamic interplay between the CNY currency rate and trade flows amidst the COVID-19 pandemic. The research reveals a persistent equilibrium connection between the REER, import volumes, and export volumes. Moreover, import trade is subject to Granger causality influence from changes in the real exchange rate of the RMB, suggesting that this exchange rate significantly affects fluctuations in total imports. Further analysis reveals that the impact of imports and exports on fluctuations in the RMB exchange rate is relatively minor. However, the impact of the Renminbi exchange rate on trade flows is increasingly considerable and becomes more clearly observable over an extended period.