What does it mean for the renminbi to appreciate externally and depreciate internally?

External appreciation refers to an increase in the value of other currencies. For example, if 7 yuan is worth 1 dollar, now 6 yuan can be exchanged for 1 dollar, and then the yuan will appreciate against the dollar. However, due to the fact that the value of currencies in different countries around the world changes, it is not uncommon for some currencies to appreciate and for others to depreciate.

Whether the renminbi appreciates externally depends mainly on the ratio of the renminbi to the world's major currencies, especially the US dollar.

Internal depreciation refers to the decline in the purchasing power of the RMB in China, that is, there is inflation, prices, and things that can be bought for 100 yuan (such as a bag of rice) can now be bought for 105 yuan, indicating that the RMB has depreciated in the domestic market.

The renminbi appreciatedrefers to the renminbi relative to other currenciesPurchasing powerFor example, in the past, it cost 8 yuan for 1 US dollar for Chinese residents, but now it only costs 7 yuan for 1 US dollar.

The appreciation of the renminbi is relative to other currencies, that is, the purchasing power of the renminbi increases. The reason for the renminbi's appreciation is due to internal dynamics in China's economic system and external pressures. Internal influencing factors include the balance of payments.

The state of foreign exchange reserves, the state of prices and inflation, the state of economic growth and the level of interest rates. In 2012, the exchange rate of the renminbi was in a state of flux, and by October 15, 2012, the spot exchange rate of the renminbi against the US dollar hit a new high since 1993.

The main reasons for the external depreciation and internal appreciation of the renminbi are as follows:

1. The balance of payments is unbalanced. The imbalance in the balance of payments refers to the fact that the country's export income is lower than the import expenditure, resulting in a deficit, which leads to the depreciation of the renminbi.

2. Improper flow of domestic funds. As investors move funds abroad, domestic cash flow is inappropriate, resulting in the depreciation of the renminbi abroad.

3. Policy impact. ** The policy has affected the circulation of the currency, which has changed the trend of currency flow, resulting in the depreciation of the renminbi.

4. Market factors. With the changes in the international financial market, the RMB exchange rate will also be affected, resulting in the depreciation of the RMB to the outside world.

This suggests that the inflation problem may be more serious than the data suggests.

Originally, the appreciation of the local currency helped to alleviate inflationary pressures, but the overall situation from the second half of last year to the present is that the rise in inflation and the appreciation of the local currency coexist, that is, the appreciation of the renminbi externally and the depreciation of the internal value, which may mean that the actual inflation is underestimated.

However, the depreciation of the renminbi is also called the depreciation of the renminbi exchange rate; The appreciation of the renminbi is also called the appreciation of the exchange rate of the renminbi Yunchiming. The depreciation or appreciation of the renminbi is mainly measured by the change in the value of the US dollar against the renminbi. This comparison is the exchange rate.

Under normal circumstances, the exchange rate of the US dollar against the renminbi will remain in a relatively stable and narrow range, which is a normal wave difference. However, if the exchange rate continues to move in a certain direction over a relatively long period of time (days, months or years), it will be regarded as a depreciation or appreciation of the RMB.