How China to US Foreign Exchange Rate Relates to US Interest Rate and Bank Loans

This research investigates the interactions of U.S. interest rate, the different types of bank loans at all U.S. commercial banks, production activities and the foreign exchange rate between U.S. and China. This paper uses monthly data from 1981 to 2012 to show that some U.S. bank-loan-related macro-economic indicators are related to exchange rates between U.S. and China. The results demonstrate that U.S. short-term federal funds rate, U.S. manufacturing capacity utilization, and three types of banks loans at all U.S. commercial banks could be good predictors and determinants of the overall exchange rate between these two important international currencies