Objective/Signification This paper aims at analyzing the short-term impact of fed rate increase on RMB exchange rate under the background the fed rate increase. It plans to offer some reference on the internationalization of RMB, and timely prevention of risks and stabilization of RMB exchange rate.

Method/Process Analysis is done by performing impulse response function and variance decomposition on main variables with VAR model.

Result/Conclusion The results show that: 1)the fed rate increase leads to short-term depreciation of RMB exchange rate; 2) the fed rate increase is to affect RMB exchange rate on asset price, balance of payments, capital flow, and monetary policy; 3) reasonable guidance of expectations is also the main way to affect exchange rates. Facing these, China should continue to develop real economy vigorously, insist on the supply-side structural reform; adhere to reform and opening up and multilateral cooperation mechanism; consolidate the macro-economic base to stabilize investors' confidence in China's economic growth.