Financial Risk Analysis Approach for International Capital Flows

As the financial institutions become more and more market-oriented, the environment of financial market is more complicated and unpredictable in the trend of economic globalization. Therefore, it is necessary measure to introduce advanced risk management experience. This paper analyzes China's financial path through transnational capital flows under the background of International opening, and constructs foreign exchange market pressure index drawing on scholars' research. It adopts VAR model to study the effect on national foreign exchange market by international capital flows. The analysis results conclude that when international capital flows are net inflows it has larger effect on foreign exchange market. The intervention by monetary authorities would weaken the impact in the long run.