Why does the depreciation of the US dollar and the yen weigh on China s domestic inflation?

Inflation is a thing where more money chases fewer goods, that is, it is only related to the amount of money and the total amount of goods. To say that "the depreciation of the dollar has caused the rise of raw materials such as energy and metals" has led to inflation in our country is a kind of shirking responsibility. Many people have studied microeconomics and know that this thing is determined by supply and demand, and cost does not necessarily lead to it.

If the cost is **, **it must be**, there will be no such thing as "industry-wide loss" in this world. (Speaking of which, the photovoltaic industry is crying, the output is too high, and it can't be sold, uncle and aunt, do you buy photovoltaics?) But why do people forget about macroeconomics?

When will the cost go up? Do raw materials account for such a high proportion of the final product? Speaking of which, the real estate industry laughed, the cost per square meter is 2,000, selling 20,000, the cost is up 10%, selling 30,000.

Do you believe that it is caused by the cost **? Hayek and Friedman argued about the question of "money is water" or "money is honey". Lao Fu believes that money flows evenly like water, and eventually the over-issuance of currency will be like adding water to a cup, causing the water level to rise.

This statement could explain the general rise in goods and services** over the past 78 years. Hayek believed that money is like honey, and that the impact of over-issuing money on different goods and services is inconsistent, and that money will first chase scarce resources (especially land),**, collectibles and other high-risk assets, and then slowly pass on to the final product. Personally, I think that both are right, and money is first honey and ultimately water.

Over-issued currency will indeed be preferentially transmitted to certain commodities, certain fields, and certain countries, and eventually lead to the increase in the price of all commodities. Specific to the world, the dollar is the world's currency, the yen has been a safe-haven currency in the past, both have experienced a long-term 0 interest rate stage, must be looking for assets that can effectively maintain and increase the value of the world, a country has established a relatively complete market economy system, the political situation is relatively stable, the dollar will flock to, so there are Asian tigers, BRIC these concepts, these countries in the economic development at the same time, assets have a large **, prices also have a certain **. <>

To put it simply, the dollar is the world's currency, and if the dollar is worthless, it will be inflation all over the world, and it is difficult for China to stand alone. At the micro level, the impact of the US dollar on China must be through foreign trade channels. The depreciation of the US dollar has led to an increase in raw materials such as energy metals**, and China is a major importer of these raw materials, so there are imported cost-driven inflationary pressures.

The depreciation of the US dollar is the appreciation of the RMB relative to the RMB, and the quantitative easing has led to a decline in US interest rates, and more capital will naturally flow to China. If the exchange rate is allowed to fluctuate and the renminbi appreciates, these inflationary pressures can be offset to a large extent, but exports have been hit hard, and this will certainly not be done in the current situation where the 7 guarantees are suspended. Stabilizing prices or maintaining growth is a difficult problem that we will always face.

Capital will only flow into places where there are profits, and China is in the best situation, so it is all coming, and there is more money to naturally inflation.

Yen. The sharp depreciation of the dollar has attracted a lot of attentionAnd according to the downward trend, the yen is likely to continue to depreciate。On the one hand, this is because of the long-term interest rate differential between the United States and Japan.

is expanding rapidly, on the other hand, because the Russia-Ukraine conflict has increased Japan's import costs, making Japan ** deficit.

More severe. It can be seen that both of these reasons are very fatal for Japan, and they cannot solve them in the short term, so it is likely that the yen will continue to depreciate.

First, the long-term interest rate differential between the United States and Japan is widening rapidly

The Fed raised interest rates.

In the case of balance sheet reduction, Japan is due to the maintenance of domestic monetary policy.

For the sake of independence, the Bank of Japan is still carrying out treasury yield curve control, and has not followed the Fed to do the same, and has not made much response to the Fed's interest rate hike and balance sheet reduction. Under such circumstances, the interest rate differential between the United States and Japan widened rapidly, which led to the depreciation of the yen against the dollar. It can be said that the United States and Japan have very different ideas about the direction of monetary policy, which has also led to Japan not keeping up with the pace of the United States, which in turn has led to the rapid depreciation of the yen against the dollar.

So from this point of view,If the Bank of Japan does nothing, or if the Fed continues to raise interest rates, the yen will continue to depreciate

Second, the Russia-Ukraine conflict has increased Japan's import costs

Against the backdrop of the Russia-Ukraine conflict, Japan's import costs have also increased. You must know that Japan is a country that is extremely dependent on imports, so when the cost of imported goods in Japan became high, its ** deficit also came directly to the historical peak, which led to the depreciation of Japan against the US dollar to a certain extent. So from this point of view, the Russia-Ukraine conflict has also indirectly affected Japan, making Japan in this currency war.

fell into the disadvantage. As a result, the longer the conflict between Russia and Ukraine continues, the greater the cost of importing goods from Japan, and the yen will continue to depreciate.

In summary, Japan's depreciation against the dollar is likely to continue as the long-term interest rate differential between the United States and Japan is widening rapidly, and the Russia-Ukraine conflict has increased Japan's import costs.

The U.S.-Japan long-term interest rate differential is widening rapidly, and it is difficult for the yen to fight back against the dollar in such a situation, so it is likely that it will continue to depreciate, and this situation may continue for a long time.

It is inevitable that the yen will continue to depreciate, after all, the living space of the yen in the global environment is more worrying, and a series of measures by the Bank of Japan cannot play a role in protecting the yen, so it will be difficult for the yen to turn over for a period of time in the future.

It is because the US economy has collapsed for the first time, and there is a financial crisis and inflation in the United States, so it will depreciate sharply. As far as the current development trend is concerned, there may continue to be a depreciation, and such a depreciation will also affect the economies of the two countries.

The main reason for the recent situation is that it has been affected by the world economy, and it has also been affected by some empty wisdom, so it will also lead to depreciation behavior will continue to depreciate, after all, the epidemic situation in Japan is getting more and more serious, and the impact on local residents is also very serious.

Due to the current poor economic development of the United States, the yen has depreciated against the dollar by a large margin, and she will not continue to depreciate.

Currency appreciation is not necessarily beneficial. Therefore, we need to look at the issue of RMB appreciation in two parts. There are two factors that contribute to the appreciation of a currency.

One is the adjustment of the gold content of the currency by the first bank in China, and the other is the demand for the currency in the international market. Today's appreciation of the renminbi is largely influenced by the international market, because of the strong position of the renminbi and China's overall strength. We know that China's current national situation is deflation, so it is necessary to expand domestic demand.

The appreciation of the renminbi means higher raw material and labor costs, and relatively lower profits, which will make China less attractive to foreign investment. The international labour market is less competitive and the danger of deflation is exacerbated. In the long run, this will lead to inflation due to tight exports.

Therefore, the best state of a currency is that the exchange rate is stable, or at least a steady progress. To your question, let's assume that China is currently in a period of inflation, and the appreciation of the renminbi has a particularly positive significance. During the period of inflation, there will inevitably be currency depreciation, and at this time, the appreciation of the renminbi can effectively curb inflation, stabilize social order, and restore normal national production.

Let's take a simple example.

Suppose du:

Now China. Zhi bought $1 trillion in U.S. Treasury DAO (in fact, it can't be returned), and assumes that $1 = 10 RMB. In other words, the Yankees owe us: 1 trillion * 10 = 10 trillion RMB.

Now it's okay, the Americans are asking for the appreciation of the yuan, 2 US dollars = 10 RMB (think about whether the RMB has appreciated: the original 1 RMB = US dollars, now 1 RMB = US dollars), so that the calculation is not right, the debt that Americans owe us becomes: 1 trillion * (10 2) = 5 trillion RMB.

Now it suddenly dawned on me that the hard-earned money of hundreds of millions of Chinese people, the money they had worked so hard to save by selling meat and vegetables, houses and land, had shrunk by half overnight.

In this way, the appreciation of the RMB is preventing China's economic development. Casually to make it clear, the brothers downstairs are right, the United States also let the yen appreciate to hit Japan back then.

It's hard typing, I hope it helps.

Upstairs explained correctly.

However, to put it simply, it is to increase China's export costs through appreciation, and to hit China's economic development with a chain reaction.

At that time, it was also to make the yen appreciate.

This is the usual method of the United States.

It is used to defeat the economies of developing countries, or post-developed countries, to achieve their own economic plunder.

So China must hold on.

If they don't appreciate it, they will put pressure on us, and we will ** US Treasury bonds.

At that time, the United States also let the yen rise to hit Japan, and from 85 years, the yen doubled in value, from 220 yen to 1 dollar to 110 yen to 1 dollar.

A few people upstairs are copiing ah, but there is also a point, China has a large amount of foreign debt from the United States. If the Chinese people.

In other words, the dollar will become worthless, the dollar is the world's currency, in this way, China's foreign debt will naturally become less, in fact, to prevent the economic development of a country, the most powerful thing to disrupt the monetary order, whether it is currency depreciation or appreciation, will have a great impact on a country's economy, so, stability is the best.

At that time, the yen was appreciated through the Plaza Accord, and there was no difference between the two in essence, both of which were economic blows by the United States to economic developing countries in order to consolidate its hegemony.

Currency pairs in forex appear in pairs.

For example, in Europe and the United States, the euro is against the dollar, and the euro is in front, which is based on the euro. If EUR vs USD**, then 1 EUR = USD.

When the yen falls against the dollar, the yen depreciates.

However, in foreign exchange, it is generally said that the United States and Japan are spoken, and not that Japan and the United States are spoken.

The decline of the United States and Japan is the depreciation of the dollar.

For example, if the U.S. dollar is used as the benchmark, 1 U.S. dollar = Japanese yen, and if it falls, the U.S. dollar will be less than the Japanese yen and the U.S. dollar will depreciate.

That is true. It means that 1 yen is exchanged for less than the dollar. The yen depreciated.

The renminbi depreciatedThe logic of the depreciation of the yen is basically the same, because this may mean that the assets of the yuan will shrink further, and it also means that the purchasing power of the renminbi will gradually decrease.

Whether it's for the yen or for the yuan, when the Fed raises interest rates.

If the yen and the renminbi do not raise interest rates at the same time, this phenomenon will inevitably lead to a corresponding depreciation of the yen and the renminbi. To some extent, although we need to deal with this problem by raising interest rates at the same time, if we want to effectively achieve economic recovery, we need to solve the liquidity problem of money by cutting interest rates, so we will find that many banks are not choosing to raise interest rates, but are further reducing deposit rates.

This approach will also further improve the financing capacity of many micro, small and medium-sized enterprises, thereby effectively promoting our economic development. <>

The depreciation of the renminbi will have a range of implications.

You can try to understand it this way: the depreciation of the renminbi itself will have two effects, the positive effect is to help the economic development, and the negative effect is to reduce the purchasing power of the yuan. For the former, when the RMB depreciates, this method can effectively improve the development of our export industry, and at the same time, it can also help us release more currency in the market.

For the latter, the depreciation of the renminbi will lead to a significant depreciation of assets denominated in the renminbi, which will also lead to a decrease in the purchasing power of many people. <>

We need to look at the issue of the depreciation of the renminbi from a dialectical angle.

For the yen, the depreciation of the yen will lead to a deterioration of Japan's economic prospects, but for the renminbi, if we can effectively control the magnitude of the depreciation of the yuan, we can effectively promote our economic development in this way. Especially in the post-COVID period, we need to ensure that all walks of life can recover effectively, so we need to help all walks of life effectively resume production by devaluing the RMB, and at the same time, we need to bear the negative impact of the depreciation of the RMB. <>