Discussion on shock of international capital movements on the development of financial markets

The serious damages resulted from frequently breaking out of international financial crises leads to more concerns of economists. This article is based on the discussion of models of interest rate parity theory, gave an explanation of the effect of international capital movement on the exchange rate mechanism. The author analyzed the unbalanced state of developing financial market based on the changes of interest rate parity theory. It pointed out the disadvantage of high interest finally it gave several ways of preventing the shock of international capital movement.