Dynamic Linkage between Interest Rate and Exchange Rate of RMB from the Perspective of Economic Equilibrium

As the important macroeconomic variables,theoretically,there is a positive feedback linkage between the interest rate and exchange rate.The result of this paper shows that,through Granger causality text and the VEC model,the RMB interest rate and RMB exchange rate have the two-way causal relationship,but through the impulse response model and variance decomposition analysis,the long-term linkage is greater than the short-term linkage,impact of RMB interest rate on the RMB exchange rate is greater than the impact of exchange rate on interest rates.