How did the contradiction between the exchange rate and the country s monetary macroeconomic control

For example, the current contradiction is.

1. Europe, the United States, Japan and South Korea demand the appreciation of the yuan.

2. Domestic price inflation requires interest rate hikes.

Therefore, there is a spear and shield in this: inflation is due to the fact that there is too much liquidity of the currency, and the currency needs to be withdrawn, so the interest rate is raised, and the interest rate hike will cause the inflow of hot money to cause the RMB exchange rate to rise; And China does not want the renminbi to appreciate, which is a very contradictory thing, so before the rate hike, the market felt that the rate hike was unlikely, because the exchange rate problem was not resolved.

In short, monetary regulation and control is to solve domestic problems, and the exchange rate problem is to solve external problems, which are sometimes out of sync, and there are always contradictions.

The impact of exchange rate changes on domestic prices is as follows:

1. Exchange rate change refers to the change in exchange rate, or the change in the value of one currency relative to another, but there are many factors that cause exchange rate changes;

2. Exchange rate change means that the external value of the currency fluctuates, and the exchange rate is the currency of a country that can be converted into other currencies.

3. Exchange rate changes affect the purchasing power of a country, and the relative products of the two countries will be affected by exchange rate fluctuations, thereby affecting the competitiveness of domestic products in the international market;

4. After the exchange rate changes, it will immediately affect the import of goods. First of all, there is a change in imported consumer goods and raw materials**, and then there is also a change in goods processed from imported raw materials or domestic goods** similar to imported goods;

5. After the exchange rate changes, the domestic** of export commodities also changes.

From the perspective of imports, the appreciation of the renminbi will enhance its purchasing power in the international market, reduce the import of goods, and bring downward pressure on domestic goods, pushing the price level lower;

From the perspective of exports, the appreciation of the renminbi will reduce the competitiveness of domestic goods in the international market, resulting in a decrease in exports, affecting the economic growth rate of the economy, and the domestic price level will also fall accordingly. In addition, due to the decrease in exports and the increase in imports, the surplus has decreased, which has reduced the base currency passively put by banks due to foreign exchange appropriation, which has also led to a decline in the domestic price level to a certain extent.

When a country's external current account balance is in surplus, in the foreign exchange market, it is manifested that the foreign exchange (currency) is greater than the demand, so the exchange rate of the national currency rises, and the exchange rate of the foreign currency falls; On the contrary, when a country's international expenditure is greater than its income, the country has a balance of payments deficit, and in the foreign exchange market, it is expressed as the ** of foreign exchange (currency) is less than the demand, so the exchange rate of the national currency decreases and the exchange rate of the foreign currency rises.

When the interest rate level of one country is higher than that of other countries, it means that the cost of using funds in the national currency increases, and thus the national currency in the foreign exchange market is relatively reduced; On the other hand, it also said that the income from the abandonment of the use of funds has risen, and the international short-term capital has tended to be profitable, and the foreign exchange market has increased relatively well.

Effect of exchange rate changes on domestic prices:

An exchange rate change is a change in the exchange rate, or a change in the value of one currency relative to another, but there are many factors that cause the exchange rate to change;

Exchange rate change means that the external value of a currency fluctuates, and the exchange rate is the currency of a country that can be converted into other currencies**;

Exchange rate changes affect the purchasing power of a country, and the relative value of the products of the two countries will be affected by exchange rate fluctuations, thus affecting the competitiveness of domestic products in the international market;

Immediately after the exchange rate changes, there will be an impact on the ** of imported goods. First of all, there is a change in imported consumer goods and raw materials**, and then there is also a change in goods processed from imported raw materials or domestic goods** similar to imported goods;

After the exchange rate changes, the domestic** of exported goods also changes.

Exchange rate change refers to the fluctuation of the external value of a currency, including currency depreciation and currency appreciation, the exchange rate is the currency of a country can be converted into other currencies**; Exchange rate change refers to the change in the exchange rate, or the change in the value of one currency relative to another, but there are many factors that cause the exchange rate change, such as **, inflation, etc.;

Exchange rate changes affect the purchasing power of a country, and the relative value of the products of the two countries will be affected by exchange rate fluctuations, thus affecting the competitiveness of domestic products in the international market;

Immediately after the exchange rate changes, there will be an impact on the ** of imported goods. First of all, there is a change in imported consumer goods and raw materials**, and then there is also a change in goods processed from imported raw materials or domestic goods** similar to imported goods;

After the exchange rate changes, the domestic** of exported goods also changes. If the exchange rate of the local currency falls, the purchasing power of the foreign currency increases, and the demand for domestic exports increases by foreign importers. In the case that the number of export commodities cannot increase accordingly, the domestic export commodities must be exported.

In the case of primary commodity exports**, the impact of exchange rate changes is particularly pronounced.

Generally speaking, the reduction of the local currency exchange rate, that is, the depreciation of the foreign value of the local currency, can play a role in promoting exports and inhibiting imports; If the exchange rate of the local currency rises, that is, the ratio of the local currency to the outside world rises, it is conducive to imports and not conducive to exports.

From the point of view of imported consumer goods and raw materials, the decline in the exchange rate will cause the **** of imported goods in the country. The extent to which it affects the general price index depends on the share of imported goods and raw materials in GDP. On the contrary, if the local currency appreciates and other conditions remain unchanged, the price of imported goods may decrease, which can play a role in suppressing the overall price level.

The increase in the exchange rate of the local currency proves that the depreciation of the foreign currency is conducive to expanding imports and suppressing exports. A high price level means inflation, that is, supply exceeds demand. However, imports are expanded, exports are suppressed, and under the condition that the amount of the national currency remains unchanged, there will be a situation where supply exceeds demand, which will naturally suppress prices.

The simple version: countries with higher prices usually have their currencies depreciating; Countries with lower prices usually have their currencies appreciating.

Detailed version: Let's say that at first the U.S.-made Ford and the Chinese-made Ford ** are the same, and after a while, the price of the U.S. Ford will increase, and it will be more expensive than the Chinese-made Ford. For American consumers, because of the increase in the price of American-made Ford, American consumers are reluctant to buy American-made cars, and are more willing to buy cheaper Chinese-made Fords, so the demand for Chinese-made Fords in the automobile market has increased.

When Americans buy Chinese goods, they need to exchange dollars for yuan, so Americans' demand for Chinese Ford increases, and so does the demand for yuan. For Chinese consumers, because the price of U.S.-made Ford has risen, Chinese consumers have also bought Chinese Ford, so the demand for Chinese Ford has increased, and the demand for American Ford has decreased. When Chinese buy American goods, they need to exchange RMB for US dollars, so the market demand for American Ford decreases, and the demand for US dollars also decreases, resulting in a decrease in the supply of RMB in the market*.

In general, due to the increase in public demand for RMB and the decrease in the supply of RMB in the market, the RMB appreciated and the US dollar depreciated.

Remarks*: RMB supply = the amount of RMB circulating in the foreign exchange market, when we exchange the RMB in the bank card for USD, we are equivalent to selling RMB in the foreign exchange market, the more we sell, the more RMB in the foreign exchange market, the more supply, and vice versa).

b.Relative interest rate – "relative" means that the interest rate in country A is higher or lower than that in country B.

Interest rate (interest) has two meanings:

Depositors - > banks - > corporate and personal borrowers.

Cost: For corporate and individual borrowers, the interest rate is the cost of borrowing money from the bank, and the higher the interest rate, the higher the interest to be repaid to the bank.

2.Yield: For depositors and banks who borrow money, the interest rate is the yield, and the higher the interest rate, the higher the yield.

Simple version: countries with high relative interest rates usually have their currencies appreciating; Countries with low relative interest rates usually have their currencies depreciating.

Detailed version: Let's say that at first the interest rates in the United States and China are the same, and after some time the Federal Reserve announces a higher interest rate. For U.S. investors, due to the increase in interest rates and the increase in "investment income", U.S. financial assets have become more attractive, and U.S. investors are reluctant to invest in China's financial assets, so investors are not exchanging dollars for renminbi, so the demand for renminbi in the foreign exchange market has also decreased.

For Chinese investors, the supply of renminbi in the foreign exchange market has increased as more and more investors are exchanging renminbi for dollars as U.S. financial assets become more attractive. Overall, due to the decrease in public demand for RMB and the increase in the supply of RMB in the market, the RMB has depreciated and the US dollar has appreciated.

1. The impact of exchange rate changes on capital flows:

When a country's currency depreciates externally, 1 unit of foreign currency can be converted into more local currency than before the depreciation of the local currency, which will increase the inflow of foreign capital and reduce the outflow of domestic capital. When a country's currency depreciates but does not depreciate abroad, that is, when the foreign exchange rate will rise but not rise, the holders of domestic capital and foreign investors will suffer losses in order to avoid the depreciation of the country's currency, which will cause the flight of domestic capital.

When a country's currency appreciates externally, 1 unit of foreign currency can be converted into less local currency than before the appreciation of the local currency, and the foreign capital inflow decreases and the capital outflow increases. When a country's currency will rise but not rise, that is, when the foreign exchange rate will fall but not fall, it will cause a large number of foreign exchange sellers and rush to buy its own currency, which will cause foreign capital inflows.

2. The impact of exchange rate changes on foreign exchange reserves:

Changes in the exchange rate of the reserve currency will affect the real value of a country's foreign exchange reserves, and if the exchange rate of the reserve currency rises, the real value of the reserve currency will increase, so that the foreign exchange reserves of the country with the reserve currency will increase accordingly; Conversely, if the exchange rate of the reserve currency falls, the real value of the reserve currency decreases, and the foreign exchange reserves of the countries with the reserve currency decrease accordingly.

A country's macroeconomic performance is often determined by both aggregate demand and aggregate supply. Exchange rate movements can affect a country's domestic macroeconomy through their impact on both of these factors.

Impact on imports and exports**: the exchange rate rises, the local currency appreciates, which is not good for exports, and good for imports; Exchange rate**, the depreciation of the local currency, is good for exports, bad for imports.

Impact on basic flows: the appreciation of the local currency and the appreciation of the exchange rate, leading to large capital inflows; The local currency appreciates and the exchange rate falls, leading to capital outflows.

Impact on foreign exchange reserves: the exchange rate of the reserve currency**, which increases the real value of foreign exchange reserves; The exchange rate** of the reserve currency reduces the real value of the foreign exchange reserves.

Impact on the level of domestic interest rates: foreign exchange rate**, favorable for the expansion of exports, rising foreign exchange earnings, unfavorable for imports and exports, and declining foreign exchange support. Foreign exchange rate**, unfavorable exports, declining foreign exchange earnings, favorable imports, rising foreign exchange expenditures.

Impact on the domestic price level: local currency appreciation, price depreciation, local currency depreciation, price appreciation.

Problems in the market are a manifestation of market imbalance and a manifestation of the contradiction between supply and demand. Looking back at 2007, some problems in the past few years still existed, and contradictions in economic aggregate gradually surfaced. On the whole, it is concentrated in the following four aspects:

First, the double surplus in the balance of payments is still growing. Exports have maintained a strong momentum, resulting in a growing current account surplus and an increase in foreign exchange reserves. With the continuous entry of foreign capital, the expectation of RMB appreciation has been strengthened, and the pressure on RMB appreciation has been increased; Second, there are clear signs of inflation, and the CPI continues to hit new highs.

Market prices and house prices continue**. Affected by factors such as the high rise in oil in the international market, the reduction of grain production and domestic oil production, and the periodic shortage of pig sources, some means of production and consumer goods have risen, especially pork, edible oil, diesel, liquefied gas, etc., which have promoted the continuous market prices; Third, investment is growing at a rapid pace. Looking back at the growth of investment in 2007, it can be summarized as "generally stable and locally active".

The overall stability is reflected in the fact that the annual growth rate of urban investment fluctuates little, basically remaining at about 26%, and the fluctuation does not exceed 1 percentage point; The investment in fixed assets of the whole society increased throughout the year, and the growth rate was slightly higher than that in 2006, and the gap was also within 1 percentage point. On the one hand, the high energy-consuming industries showed an obvious investment trend in the first quarter of 2007, and then fell significantly by the timely intervention of the country's macroeconomic control policies and measures; On the other hand, premises.

It mainly relies on the interest rate leverage to adjust, and some rely on engineering projects to adjust the amount of money, thus affecting circulation. Limit the number of currencies.

First of all, it is necessary to know that monetary policy is a measure taken by ** or ** bank to affect economic activities, and the exchange rate is affected by the supply of money. Our existing monetary policy tools are: 1. Reserve requirement system; 2. Rediscount policy; 3. Open market business.

Here's an example:

When the deposit reserve ratio of China's central bank rises from the original 1% to 2%, that is to say, the bank's 100 yuan deposit will rise from the original 1 yuan to 2 yuan and be handed over to the central bank for safekeeping. Banks used to be able to lend out 99 yuan, but now it is 98 yuan, and the currency circulating in the market has decreased. According to the relationship between supply and demand, the supply of RMB has decreased, the market demand for RMB has been strong, and the RMB exchange rate has risen, as shown in the figure

On the contrary, the central bank's reserve requirement ratio fell to 1%, the supply of RMB increased, the market demand for RMB weakened, and the RMB exchange rate fell.

In the same way, the rediscount policy and open market business, resulting in changes in the amount of currency, will affect the change of the exchange rate.