Why does a foreign trade surplus lead to an appreciation of the national currency?

The foreign trade surplus increases the country's foreign exchange reserves, and foreign exchange cannot be directly used in the country, so the foreign exchange income obtained will be converted into local currency at the exchange rate of commercial banks. When the amount of the local currency is constant, the increase in foreign currency increases the demand for the local currency, so the local currency appreciates.

I don't know this very well, because I don't usually pay much attention to this part, and I don't know much about it, so I don't know why.

1. The impact of currency appreciation on exports: inhibiting exports.

If the currency of one country appreciates, then relatively speaking, the currency of other countries depreciates, and the profit from exports will decrease. In this way, exporters may reduce their exports to a certain extent.

2. The impact of currency depreciation on exports: encourage exports.

The depreciation of a country's currency and the appreciation of other countries' currencies will increase the profits of exports and the exporters will be active. From another point of view, it also means that domestic products have the best advantages in the international market.

For example, if the original price is 100 yuan, the exchange rate of US dollar to RMB is 1 US dollar = 8 yuan.

Assuming that the RMB appreciates, 1 US dollar = 7 yuan, which means that foreigners originally had to spend US dollars to buy goods, and they need 100 7 = 14 US dollars. For foreigners, this thing is a price increase.

Then if the price of a thing increases, it will control the purchase volume or even not buy it. This means that for the exporter, the demand has decreased, and the export volume has naturally declined; After the appreciation of the RMB, if the exporter wants to ensure that the importer buys the original product with the same **, in the absence of any policy support from the state, what the exporter can do is to reduce its profit point, and may even sell at a loss to ensure sales.

The surplus represents the upward pressure on the local currency, so the central bank intervenes in the foreign exchange market, sells the local currency and collects foreign currency, and the amount of currency increases, which may lead to inflation if the offsetting is not effective.

A larger surplus is not necessarily better, and a surplus that is too high is a dangerous thing, meaning that the country's economic growth is more dependent on external demand than at any time in the past few years, and its external dependence is too high. The huge ** surplus has also brought about the expansion of foreign exchange reserves, which has brought greater appreciation pressure to the national currency. (except Germany).

Because the increase in the balance of payments surplus, especially the capital account surplus, is actually an increase in the direct domestic investment of foreign capital, which leads to an increase in the money supply.

Under the condition of interest rate marketization, the balance of payments surplus means that the domestic money supply increases, and when the market demand for money grows less than the growth rate of money supply, the money market supply exceeds the demand, and the interest rate in the financial market falls.

When the interest rate in the international market is relatively low and the interest rate in a country's financial market falls, then the interest rate differential between the domestic interest rate and the international market interest rate will narrow, and the narrowing of the interest rate differential will slow down the inflow of international capital, which is conducive to reducing the balance of payments surplus. However, falling interest rates will lead to a depreciation of the renminbi, creating inflation.

Since the second half of 2003, China's economy is facing inflationary pressure, in order to prevent the negative impact of the inflation of the stock on the economy, the bank has to maintain the current deposit control interest rate and loan floating interest rate, thus delaying the process of interest rate marketization.