Why a rising renminbi will reduce the debt of Europe and the United States

The appreciation of the renminbi, assuming that it was 10 yuan to one euro, is now 5 yuan to one euro. It may seem as if we are taking advantage, but let's say they borrowed us 10 yuan (1 euro) and now they only have to pay back 5 yuan (1 euro now). In other words, they borrowed 100 million euros from us, and we actually gave 1 billion yuan, but due to the appreciation of the yuan, they are now paying back 100 million euros, and we actually only got back 500 million yuan ......We actually lost 500 million RMB....That's what it means......

The appreciation of the renminbi means that the renminbi is worth much, so that Europe and the United States have much less debt. However, if a country's economy does not reach a certain level, appreciation can have many negative effects....

The appreciation of the renminbi means that my money has become more valuable, for example, when 1 dollar = 20 yuan, I borrow 10 yuan from you, and he pays you back 1 dollar, which is 20 yuan, and when the renminbi appreciates by 10 yuan = 1 dollar, he pays you back 1 dollar, and you only have 10 yuan, and you lose 10 yuan, which is basically it.

Summary. The main reason why buying U.S. bonds may lead to the depreciation of the renminbi is capital outflows. When domestic investors in China buy U.S. bonds, they need to convert RMB into U.S. dollars to pay for the purchase**.

This causes the RMB to decrease and the US dollar to increase, thus depreciating the RMB relative to the US dollar. Capital outflow refers to the outflow of capital out of one country to other countries. When Chinese investors buy U.S. bonds, they move their money to the U.S. in search of higher returns or a more stable investment environment.

This capital outflow increases the amount of dollars and at the same time decreases the amount of yuan. Due to changes in supply and demand, the value of the renminbi has decreased relative to the US dollar. In addition, buying U.S. bonds could also lead to the People's Bank of China (PBOC) intervening to stabilize the renminbi exchange rate.

If the renminbi depreciates too quickly or too much, the PBOC may intervene, such as buying renminbi to provide support, or adjusting monetary policy to affect the supply and demand of the renminbi. These measures could increase the PBOC's foreign exchange reserves, but could also lead to a depreciation of the renminbi.

The main reason why buying U.S. bonds may lead to the depreciation of the renminbi is capital outflows. When investors in China's national wide limb buy U.S. bonds, they need to exchange the renminbi for U.S. dollars to pay for the purchase**. This causes the RMB to decrease and the US dollar to increase, thus depreciating the RMB relative to the US dollar.

Capital outflow refers to the outflow of capital out of one country to other countries. When Chinese investors buy U.S. bonds, they move their money to the U.S. in search of higher returns or a more stable investment environment. This capital outflow increases the amount of dollars and at the same time decreases the amount of yuan.

Due to changes in supply and demand, the value of the renminbi relative to the US dollar has declined. In addition, buying U.S. bonds could also lead to the People's Bank of China (PBOC) intervening to stabilize the renminbi exchange rate. If the renminbi depreciates too quickly or too much, the PBOC may intervene, such as buying renminbi to provide support, or adjusting monetary policy to affect the supply and demand of the renminbi.

These measures could increase the PBOC's foreign exchange reserves, but could also lead to a depreciation of the renminbi.

Can you add, I don't quite understand it.

The forex market is complex and involves a variety of factors and participants. The movement of the RMB exchange rate is affected by many factors, including the failure of economic fundamentals, interest rate differentials, conditions, policies, and so on. Buying U.S. bonds is only one of the factors, which may have a negative impact on the exchange rate of the renminbi, but it is not the only decisive factor.

The rise in U.S. bond yields is likely to be influenced by market conditions, supply and demand, and inflation. Some investors have little demand for U.S. bonds, and the increase in the number of U.S. bonds has led to an imbalance between supply and demand, rising bond **** and yields, which indirectly leads to inflation.

The reason for the rise in interest rates on U.S. bonds.

1.Repair of economic fundamentals: Although the U.S. economy suffered serious setbacks due to the global epidemic in 2020, the epidemic was gradually effectively controlled in the later stage, vaccines were introduced, and the U.S. economy gradually recovered. After the fundamentals gradually recover, the level of equity asset income will also increase;

2. Rising inflation expectations: In the case of a good overall situation, inflation in the United States is also accelerating, investors are more optimistic about the commodity market, and the country has issued more bonds, and there is an oversupply, resulting in higher interest rates in the United States.

3.Early withdrawal from the Federal Reserve's monetary easing policy: due to the rapid development of commodities, the only thing that can be said is that the central bank's original loose monetary policy may be tightened, resulting in investors ** Treasury bonds.

Summary. Hello, I'm glad to answer that the increase in dollar debt does not mean that the dollar depreciates. An upward revision of dollar debt does not mean a depreciation of the dollar.

An increase in U.S. dollar debt usually refers to an increase in U.S. interest rates, which may be due to factors such as the Federal Reserve's interest rate hike or the market's optimistic expectations about the U.S. economic outlook. In this case, investors may be more willing to hold assets in US dollars, which will lead to an increase in the value of the US dollar. However, if the upward revision of the dollar debt is due to factors such as a weak US economy or political instability, then it may lead to a decrease in investor confidence in the dollar, which may lead to a depreciation of the dollar.

In conclusion, the impact of the US dollar debt increase on the US dollar exchange rate depends on a variety of factors and needs to be considered comprehensively.

Hello, I'm glad to answer for you, the increase in dollar debt does not mean that the dollar is the first to depreciate. An upward revision of dollar debt does not mean a depreciation of the dollar. An increase in U.S. dollar debt usually refers to an increase in U.S. interest rates, which can be due to factors such as the Federal Reserve's interest rate hike or the market's optimistic expectations about the U.S. economic outlook.

In this case, investors may be more willing to hold assets in US dollars, which will lead to an increase in the value of the US dollar. However, if the upward revision of the dollar debt is due to factors such as a weak US economy or political instability, then it may lead to a decrease in investor confidence in the dollar, which may lead to a depreciation of the dollar. In short, the impact of the US dollar debt hike on the US dollar exchange rate depends on a variety of factors and needs to be considered comprehensively.

United States Dollar Currency abbreviation: USD; ISO 4217 Currency**: USD; Symbol:

USA$) is the legal tender of the United States of America, the Republic of El Salvador, the Republic of Panama, the Republic of Ösen-Guador, the Democratic Republic of Timor-Leste, the Republic of the Marshall Islands, the Federated States of Micronesia, the Republic of Kiribati and the Republic of Palau.

Summary. Hello, happy to answer your <>

If the U.S. raises the debt ceiling, the U.S. dollar will fall, because the U.S. raising the debt ceiling will have a certain impact on the U.S. dollar, and the market believes that the U.S. raising the debt ceiling will have a negative impact on the U.S. dollar, so the U.S. dollar will depreciate.

Will the dollar fall if the US raises the debt ceiling.

Hello, happy to answer your <>

The U.S. raising the debt ceiling will have a negative impact on the U.S. dollar, because the U.S. raising the debt ceiling will have a negative impact on the U.S. dollar.

Extension: A debt is a specific relationship of rights and obligations between the parties that arises in accordance with the provisions of the contract or in accordance with the provisions of the law. According to the general theory, the holding of closed debts is a civil legal relationship between specific parties that requests a certain payment.

Summary. Dear, I'm glad to answer your <>

If the U.S. raises the debt ceiling, the dollar will depreciate. This is because the issuance of more bonds to finance increases the amount of money, leading to currency depreciation, raising the debt ceiling, and the possibility of a balance and game between fiscal deficit and debt growth and the demand for the value <>of the dollar by domestic and foreign investors

<> Will the US Dollar Weaken as the US Raises the Debt Ceiling?

Dear, I'm glad to answer your <>

If the U.S. raises the debt ceiling, the dollar will depreciate. This is because the issuance of more deficit bonds to finance increases the amount of money, leading to the depreciation of the currency, raising the debt ceiling, and the possibility of weighing and playing between fiscal deficit and debt growth and the demand for the value of the dollar by domestic and foreign investors<>

<> If the U.S. debt defaults in the short term, what will be the reaction of the dollar index and international**?

First of all, a short-term default will weaken investors' confidence in the political and economic stability of the United States, causing them to abandon their holdings of the dollar and turn to other relatively safer currencies, thus making the dollar index **.

Then whether it is a debt default or an increase in the debt ceiling, the dollar index will be bearish, and the international safe-haven assets will continue to rise.

Raising the debt ceiling will not lead to an outright debt default, but it will affect the market's assessment of the credit of the United States, which will lead to the dollar exchange rate, which will increase the attractiveness of safe-haven assets such as the dollar. Credit concerns, thereby increasing the attractiveness of safe-haven assets such as **, in short, safe-haven assets such as ** usually perform well in situations of high political or economic uncertainty, but the specific trend still depends on various macroeconomic factors and changes in market expectations, and it is necessary to pay attention to the dynamics of the market.

Is it a right choice to short the USD/RMB exchange rate at this point in time and go long international ** spot?

From the current market situation, the USD/RMB exchange rate is affected by a variety of factors, such as U.S. economic growth, war situation, political situation, similarly, the international spot is also affected by a variety of factors, such as the global economic and political environment, inflationary pressure, supply and demand, therefore, Investors need to fully analyze and understand the impact of these factors and their trends, and control the investment strategy in a timely manner.

If the U.S. dollar buys 800 million yuan of China's stuff when the U.S. dollar is 8:1 against the renminbi, China gets $100 million in U.S. foreign exchange reserves.

When China wants to pay the account, it will exchange the $100 million back into RMB, and when China's currency appreciates and the exchange rate of the US dollar against the RMB is 6:1, the United States only needs to pay 600 million yuan. From the perspective of China's burning skin, it lost 200 million yuan.

As the renminbi appreciates, the exchange of dollars against the renminbi will decrease.

China's ** U.S. bonds have naturally shrunk.

Therefore, as China's currency appreciates, its holdings of U.S. bonds have decreased, mainly due to changes in the exchange rate. (Your addendum is a bit general, but it's mainly due to the change in the exchange rate barrier between the renminbi and the dollar, and you're not mistaken.) ）