Analysis of China-U.S. Exchange Rate based on U.S. Dollar Rate Hike

Based on the data on the exchange rate of RMB against the U.S. dollar, the ARIMA model is used to forecast the exchange rate of RMB against the US dollar in the coming year. The results show that the RMB will continue to depreciate, but there is no possibility of a large depreciation. The rate hike of the Federal Reserve System (FED) is both a challenge and an opportunity for China. In the context of the dollar's continued appreciation to contain domestic inflation, capital outflows will intensify to some extent. At the same time, because of the impact of COVID-19, China's room for policy adjustment has been narrowed. However, the rate rise of the US dollar has accelerated the process of de-dollarization and local currency settlement, providing opportunities for the internationalization of the RMB. China should seize the opportunity of the interest rate hike on the U.S. dollar and introduce reasonable policies to further promote RMB internationalization and China's economic recovery.