Xudong Liu

Xudong Liu

August 20, 2024

RMB, Exchange rate volatility, The “Belt and Road” Initiative.

Using the high-dimensional factor model and the currency anchor model, this study analyses the driving factors of the exchange rate volatility for the 65 countries along the “Belt and Road” Initiative. Based on the data from January 2005 to December 2023, it investigates the spatiotemporal evolution of currency anchor in these countries. The results indicate that since the implementation of the “Belt and Road” Initiative in 2013, the RMB has become the third-largest “approximate leader” driving exchange rate volatility in the “Belt and Road” region, following the US dollar and the euro. In addition, the “Belt and Road” Initiative has a promoting effect on the currency anchor of RMB, and the RMB’s currency anchor exhibits significant spatial heterogeneity.

© 2024, the Authors. Published by ISCCAC

This is an open access article distributed under the CC BY-NC license