Why is the dollar depreciating and the pound rising?

Why did the renminbi appreciate against the US dollar while depreciating against the euro and the pound? Because the United States, the eurozone, and the United Kingdom are singing red and white.

The reason for the appreciation of the renminbi against the dollar is simple, because the vast majority of China's foreign exchange reserves are in the US dollar. The external appreciation is mainly against the US dollar and the Japanese yen. Ba Shusong wrote:

If the renminbi appreciates by 5% against the dollar, the $1 trillion in foreign exchange reserves will shrink by $50 billion. The depreciation of the euro and the pound is to better implement anti-dumping and anti-monopoly on Chinese goods in these places! It is not difficult to enact some laws to increase punitive tariffs on the grounds that Chinese goods are too low, so that Chinese goods are discriminated against in these places.

Japan is an export-oriented country, and the depreciation of the yen against the renminbi can make Japanese goods cheaper in China. There is a lot of content on the Internet in this regard.

The United States, Japan, the eurozone, and the United Kingdom are all the world's top economies, can they do what they suffer with their strong economic strength? I don't think so, the mystery of this is best known only by the initiator of giving! However, one thing is clear, that is, the United States and its allies want to use their powerful economic strength to control the RMB exchange rate through the exchange rate, which is a battlefield without gunpowder, so as to cause chaos in China's economy and profit from it to achieve the goal of peaceful evolution.

Why is the US dollar pound so valuable?

By "valuable", do you mean that the nominal exchange rate of a country's currency to a foreign currency (the exchange rate listed by the bank) is relatively high, right?

In fact, nominal exchange rate = real exchange rate * foreign goods ** domestic goods **.

In the above formula, foreign goods** are measured in foreign currency, and domestic goods** are measured in local currency, and the actual exchange rate refers to the exchange ratio of goods between the two countries (e.g., if 2 units of Chinese goods are exchanged for 1 unit of American goods, the actual exchange rate of RMB against the US dollar is.

Therefore, we can say that whether a country's currency is "valuable" or not is directly proportional to the value of domestic goods [international market**], inversely proportional to the domestic price level, and directly proportional to the foreign price level.

The reason why the pound is valuable is that the composite price index of goods produced in the UK is relatively high in the international market, and the price level in the UK is relatively low.

The exception is that we can see some very specific phenomena. For example, Japanese and Korean goods** are very high, but the value of the yen and won is very small. Why? This is because Japan and South Korea, which are measured in one local currency, are relatively high.

Why is the US dollar and the British pound valuable, because the US dollar is the world's main trading currency linked to oil, and the hedging rate is relatively high. As the dominant currency in the United Kingdom, the British pound retains its value at a lower rate than the US dollar.

The reason why the British pound is valuable: Because the United Kingdom was the first industrialized country in the world and once dominated the international financial industry, the British pound was once the most widely used currency for denominated settlement in international settlement business. After World War I and World War II, the British economic status continued to decline, but due to historical reasons, the British financial industry is still very developed, and the British pound still occupies a very high position in the settlement of foreign exchange transactions.

This is due to the different exchange rates between different countries, and the different exchange rates are due to the different markets between countries, and the prices in the United States and the United Kingdom are relatively high, so the exchange rate of the US dollar is high.

1. The rise of the euro: In the international financial trading market, the euro has gradually replaced the US dollar as one of the main currencies in the market, thus creating a situation of competing with the US dollar;

2. Excess U.S. dollar foreign exchange reserves: After the U.S. dollar and ** ceased to be convertible, the global dollar reserves were excessive, resulting in a certain imbalance in the global economy, which also led to the United States becoming the world's largest debtor country.

The only reason for currency depreciation is continued massive monetary easing, including the dollar.

1.The reason why the pound is worth more than the dollar.

The British pound and the US dollar are two of the most important currencies in the world. However, although the US dollar remains one of the most influential currencies in international** and global financial markets, the British pound is worth more than the US dollar in some cases. Here's why the pound is worth more than the dollar.

2.The UK economy is strong.

The UK is one of the most developed economies in the world, with the highest GDP in Europe. In recent years, the UK has grown at a faster rate of economy, attracting a large number of foreign investors. Due to the strong economy of the United Kingdom, the British pound is highly recognized in the international market, which has led to an increase in its value.

3.Monetary policy for the pound is tighter than in the United States.

The Bank of England is generally more inclined to tighten monetary policy than the Fed. It actively manages the inflation rate to ensure that inflation is within the target range (usually set at 2%). This means that the pound has less money than the US dollar and is therefore more valuable.

4.UK**.

In contrast to the turmoil and uncertainty of the political system in the United States, the stability of the United Kingdom** has a positive impact on the value of the pound. When the political system is stable, investors are more willing to invest in the UK. The capital flows from investment will drive the value of the pound upward.

5.The historical and cultural value of the pound.

The United Kingdom is a country with a long history and culture, and its currency is also rich in cultural and historical significance. The British pound has a strong influence in the world and was once the dominant currency for international** and investment. Its historical and cultural value is unmatched by other currencies, so the British pound is in some cases more popular than others.

6.Brexit.

Brexit is a major event that has attracted global attention. While it has created some market uncertainty in the short term, Brexit has also made the UK more independent and self-reliant. This gives the pound a stronger position in the international market and could drive the value of the pound up in the future.

7.Conclusion.

While the pound is worth more than the dollar in some cases, this does not mean that the pound is always more popular than the dollar. The value of any currency is affected by a variety of factors, including political instability, economic downturn, inflation, and fiscal policy, among others. As a result, the most powerful currencies in international financial markets are usually those with strong economies, political stability, and tight monetary policy.

On the other hand, the three major currencies of the world, the US dollar, the euro, and the British pound, as an international investor, the first consideration is not to depreciate the funds in their hands.

The strength of the currency is not only the powerful military behind it, but also the credit system. The increasing issuance of currency leads to the depreciation of the currency, and the credit system also declines.

Let's first look at the current situation of the dollar and the euro to analyze why the pound has become a big winner in the depreciation of the dollar.

As of October 2020, the U.S. Treasury bond exceeded $26 trillion, and the interest on the Treasury bond was about $550 billion per year.

If you think of the U.S. dollar as a listed company, imagine how many investors will invest, and once the investors leave the market, they will definitely choose other currencies, the euro or the pound.

Euro: The euro and the dollar are one and the other, the European economy is still dominated by high-end manufacturing, the continuous appreciation of the euro makes it more and more difficult for Europe's manufacturing exports, more and more imports, and the cost gradually increases The economy has been sluggish for a long time. The coexistence of high inflation and low growth has caused the European economy to suffer a double whammy.

The euro's long-term pressure on the US dollar has caused international investors to feel uneasy and lack investment confidence.

Pound sterling: The UK economy is an important entity, an economic powerhouse, and a financial center. The UK has large reserves of coal, gas and oil; The UK's primary energy production accounts for about 10% of total GDP, which is very high in an industrial country.

Therefore, the best flow after the depreciation of the dollar is the pound sterling, so the biggest winner of the depreciation of the dollar is the pound sterling.

Yes. Because the British economy has been sluggish, coupled with the change of leaders, the intensification of internal contradictions, and the "backlash" effect of sanctions against Russia, it will be lower than 8, and on the other hand, the RMB is relatively stable, and the economic growth is slightly better than that of Europe and the United Kingdom, so the pound exchange rate is still possible**. Yes.

Because the British economy has not been very prosperous, coupled with the change of leadership, the intensification of internal contradictions, and the "backlash" effect of sanctions against Russia, it will be lower than 8, and on the other hand, the RMB is relatively stable, and the economic growth is slightly better than that of Europe and the United Kingdom, so the pound exchange rate is still sold if possible**. Yes. Because the British economy has been sluggish, coupled with the change of leaders, the intensification of internal contradictions, and the "backlash" effect of sanctions against Russia, it will be lower than 8, while the RMB is relatively stable, and the economic growth is slightly better than that of Europe and the United Kingdom, so the pound exchange rate is still possible**.

Yes. Because the British economy has been sluggish, coupled with the change of leaders, the intensification of internal contradictions, and the "backlash" effect of sanctions against Russia, it will be lower than 8, while the RMB is relatively stable, and the economic growth is slightly better than that of Europe and the United Kingdom, so the pound exchange rate is still possible**.

Whether the pound will depreciate is not a short-term trend, it is a dynamic fluctuation. It depends on the long-term trend.

As can be seen from the chart above, although the pound is volatile, it is still weak.