How are the exchange rates between currencies determined?

There are many factors that affect the exchange rate of currencies in various countries.

The reason why the currencies of various countries can be compared and can form a comparison relationship with each other is that they all represent a certain amount of value, which is the basis for determining the exchange rate.

Under the gold standard, ** is the standard currency. The monetary units of two countries on the gold standard can determine the price of each other, i.e., the exchange rate, according to the amount of gold they contain.

Under the paper money system, each country issues paper money as a representative of metal currency, and with reference to the past practice, the gold content of paper money is stipulated by law, which is called gold parity, and the comparison of gold parity is the basis for determining the exchange rate of the two countries.

However, paper money cannot be exchanged for **, therefore, the legal gold content of paper money is often in vain. Therefore, in countries with official exchange rates, the exchange rate is set by the national monetary authority (Ministry of Finance, ** Bank or Foreign Exchange Administration), and all foreign exchange transactions must be carried out according to this rate. In countries with market exchange rates, the exchange rate changes with the supply and demand of currencies in the foreign exchange market.

This should be determined by two factors, on the one hand, there are long-term factors, which are mainly the position of the economic cycle in which each country is located, a country is in an economic upswing, then the country's currency has the potential to appreciate, such as China's rapid growth since 2000, the RMB will inevitably appreciate. Now that China's economy is declining, the depreciation of the renminbi is inevitable. Now that the United States is slowly recovering from the economic crisis, it is foreseeable that the dollar has the potential to appreciate.

On the other hand, there are short-term factors, which may not be explained regularly, such as the inflow and outflow of a large amount of hot money, which may lead to changes in the exchange rate of a country's currency, such as the large-scale inflow of hot money into China every month in 2010 and 2011, so the pursuit of hot money for the RMB has led to the continuous appreciation of the RMB. The short-term fluctuation of this exchange rate may also involve a certain monetary policy adopted by the country or a certain judgment of the national economy, or there may be speculation by speculators in some countries, etc. As for why the exchange rate should be at a certain value, for example, why 1 US dollar is equal to 6 yuan, and one pound is equal to 10 yuan, how is this value obtained.

There are specialized models in economics to calculate this, but those methods don't seem to be correct. I think that in fact, it is determined by a series of factors such as the total money supply, economic growth, attitudes and market forces between each country, which is difficult to determine in a simple way.

Currency in circulation (referred to as currency) is a tool or set of instruments used for the exchange of goods, and sometimes it is simply called money. It has its roots in a commodity, a special commodity. It is the specific manifestation and unit of measurement of money.

A currency area is a country or region that circulates and uses a single currency. The concept of exchange rate needs to be introduced when exchanging currencies between currency areas with different dialects.

Usually, only one currency is used in each country and is issued and controlled by a bank. However, there are exceptions. Multiple countries can use the same currency, such as the euro, which is used in the European Union.

The franc in the Economic Community of West African States (ECOWAS) and the equivalent currency in the 19th century in the Latin Confederation with a different name but freely circulated within the Union. A country can choose the currency of another country as legal tender, for example, Panama.

Choose USD as your fiat currency. Different currencies may also use the same name, for example, in France and Belgium.

Before the use of the euro, they were called francs as the currency of Switzerland. Sometimes, for special reasons, different local governments within the same country may issue different versions of their currency, such as in the United Kingdom, including England.

Scotland or even Jersey and Guernsey, which are far away from the islands, have their own versions of the pound.

They can be traded with each other in other parts of the UK, but only the English pound sterling is an internationally recognized trading currency, and other versions of the pound may be refused to be accepted after being taken out of the UK.

Generally speaking, since March 1973, the global financial system has ceased to exist with a fixed exchange rate system centered on the United States dollar and has been replaced by a floating exchange rate system. Most of the countries that implement the floating exchange rate system are the world's major industrial countries, such as the United States, the United Kingdom, Germany, Japan, etc., and most other countries and regions.

The exchange rate system is still pegged, and most of its currencies are pegged to the US dollar and the yen.

French francs, etc. After the implementation of the floating exchange rate system, the original legal gold content of the currency of each country or the parity of paper money with other countries will have no effect, therefore, the national exchange rate system tends to be complex and market-oriented.

Under the floating exchange rate system, countries no longer stipulate the range of fluctuations in the exchange rate, and the bank no longer bears the obligation to maintain the upper and lower limits of fluctuations, and the exchange rate of various countries is the result of floating and adjusting according to the supply and demand of foreign exchange in the foreign exchange market. At the same time, changes in foreign exchange supply and demand caused by a country's balance of payments are the main factors affecting the change of exchange rate surplus in the balance of payments.

The supply of foreign exchange has increased, foreign currencies have fallen, and the balance of payments deficit has fallen.

The demand for foreign exchange has increased, foreign currencies have risen and the exchange rate has risen. The fluctuation of the exchange rate is a normal phenomenon in the foreign exchange market, and when a country's currency touches the exchange rate to rise, it means that the currency is appreciating, and the falling is depreciation.

The exchange rate is affected by supply and demand, a country's currency demand is more, everyone has bought the country's currency, their currency exchange rate will rise, if the country's currency issuance is too much, inflation currency purchasing power shrinks, everyone does not trust the country's currency, have sold the stove to let the local currency buy the foreign currency, the country's currency exchange rate will decline in the old situation, imports, the appreciation of the local currency is conducive to imports, the country's money can only be exchanged for foreign currency 2 yuan before, and can be exchanged for 3 yuan after appreciation, There are so many things to buy.

It is formulated according to the reserves of **, and a country needs to have a certain amount of reserves.

It is based on the development of the country, and the exchange rate of some countries has not been stable, which is the reason.

Answer] :d exchange rate is the ratio of one country's currency to another's currency**, and it is also an asset**. Therefore, the answer is D.

Passed: Direct pricing method: exchange rate appreciation and depreciation rate = (old exchange rate new exchange rate - 1) * 100; Indirect pricing method: exchange rate appreciation and depreciation rate = (new exchange rate old exchange rate - 1) * 100.

It is the ratio of one country's currency to another, and the rate of appreciation and depreciation of the exchange rate = (old exchange rate new exchange rate -1) * 100.

The exchange rate is the comparison between the currency of one country and the currency of another country, because the names of the currencies of various countries in the world are different and the value of the currencies is different, so the currency of one country should stipulate an exchange rate for the currencies of other countries, that is, the exchange rate.

To put it simply: the exchange rate is the ratio of wealth.

Let me be more layman's for you.

A long time ago, country A and country B exchanged with each other, and they all used *** as currency, if they were all gold coins of the same color as currency, then there was no problem of exchange, and the exchange rate was 1:1

Later, country A came up with a bad idea and replaced all the fineness of ** with the original general, so the businessmen of country B were not stupid, and when they came to country A to exchange, they exchanged a B currency for 2 A currency, so that the exchange rate was 2:1, so the concept of exchange rate was born.

Later, the times are developing, and it is time for paper money, what is the value of that broken paper, in fact, paper money is national credit, so what does national credit rely on to support it? One is to rely on the wealth owned by the country, and the other is to rely on the stability of the political situation, simply understand the value of all currencies and the value of national wealth, then the exchange rate is the following formula;

Exchange rate Value of wealth of country A Value of wealth of country B Value of unit currency of country A Value of unit currency of country B.

The value of the currency in the unit of goods The wealth of the nation The number of units of currency.

Look at what affects the exchange rate, and look at what affects the wealth of the country.

1. Balance of payments. The balance of payments position is the dominant factor in determining the trend of the exchange rate. The balance of payments is the sum of various balances of payments in a country's foreign economic activities.

The two countries of AB should be each other**Oh, you can't close off the country, country A calculates from country B at the end of the year, earns money, and has a surplus. Then the wealth of country A increases and the wealth of country B decreases, so for example, it affects the change of the exchange rate, resulting in an increase in the value of the currency, that is, currency A is more valuable, and vice versa.

2. National income. For example, at the end of the year, the two countries of AB had equal revenues and expenditures, and everyone did not earn it, but the people of country A were extremely hardworking and their GDP soared, while country B could not develop well, and the GDP did not change. Then it is country A that creates more wealth for itself, and the number of unit currencies does not change, resulting in an increase in the value of the unit currency and a change in the exchange rate.

The A coin has strengthened and become more valuable. The opposite is understandable.

Third, the level of inflation. For example, at the end of the year, the income and expenditure of the two countries AB are equal, no one has earned it, and the national wealth of the two countries has not changed, but the People's Bank of China of country A has a fever and doubles the amount of money in the market, that is, the number of units of currency doubles, which is naturally inflationary, which directly leads to the value of the unit currency becoming the original 1 2, and the money is worthless, so it leads to changes in the exchange rate, and the currency A is lower, and the exchange rate is also lower, and vice versa.

Fourth, the difference in the level of interest rates. If all things are the same in AB, but the interest rate in country A is higher than that in country B, the higher interest rate will attract the inflow of foreign capital, and the people of country B will save their money in country A in order to get a higher interest rate. Obtaining a larger increase in wealth with less interest leads to an increase in the value of the unit currency, a change in the exchange rate, a currency strengthens, and the exchange rate rises.

The opposite is understandable.

Fifth, whether the political situation and social stability are easy to understand, social unrest, leading to the disappearance and flight of wealth, the reduction of social wealth, the decrease in the value of the unit currency, and the change in the exchange rate.

It is determined by the amount of currency. To be precise, it should be a currency symbol. Because paper money and electronic money are essentially currency symbols.