Is the exchange rate between the currencies of the two countries determined by negotiation between t

No, it is set by the market and a country, and certified by countries around the world. Otherwise, it is invalid.

1. International**.

2. Institutional investment.

3. Multinational corporation business.

The main thing is international**.

Recently, the United States and Europe have been asking for the appreciation of the renminbi, the reason is that China's exports are too smooth, and the United States wants to reduce China's export competitive advantage by raising the exchange rate of the renminbi against the U.S. dollar.

For example, if China exports clothing to the United States, each piece is worth 100 yuan, and assuming that the exchange rate of RMB against the US dollar is 5:1, then the cost price of exporting to the United States is 20 US dollars. Suppose the same piece of clothing, made in the United States, the cost price is 25 US dollars, then the clothes exported from China to the United States have a cost advantage of 5 US dollars, if the exchange rate reaches 4:

1. The cost of 100 yuan of clothes to the United States costs 25 US dollars. In this way, there is no advantage of **.

At the exchange rate of 5:1, the import of a Boeing aircraft, for example, costs 100 million US dollars, equivalent to 500 million yuan, and if the remittance is increased to 4:1, then only 400 million yuan will be used, reducing the cost of 100 million yuan.

If it is a country or region without foreign exchange controls, such as the United States and Hong Kong, it is determined by the market.

Countries or regions with foreign exchange control have their own decisions, and foreign exchange control is also a tool for macroeconomic control.

No, it is determined by the market or a country.

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.

For example, when the gold standard system was implemented, the British stipulated that the weight of 1 pound sterling was a ring, and the fineness was 22 carreams of gold, that is, the gold content was pure gold; The United States stipulates that the weight of 1 US dollar is a grain ring, and the fineness is 900 thousandths, that is, the gold content is pure gold. According to the comparison of the gold content of the two currencies, 1 pound = US dollar, and the exchange rate fluctuates up and down on this basis.

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.

The exchange rate has an impact on the balance of payments, national income, etc.

Exchange Rate Regime: Who Determines the Exchange Rate?

Let's say I'm in China, I see a good dollar and decide to go 1:1 with him. Produced a chair in China for 10 yuan, and wanted to sell it to the United States for dollars to buy his things, he said

$10 is too expensive, and I only need $2 for a chair like this in Japan. So I changed the exchange rate to 1:10 (USD:

RMB). $1 per handful.

The relative value of a country's currency (paper money) was determined by the amount of reserves in that country, which we call the gold standard.

After World War II, the U.S. dollar was forcibly pegged to **, and other currencies were also pegged to the U.S. dollar (in fact, they were all pegged to **), which formed the Bretton Woods monetary system, that is, the global monetary system with the U.S. dollar as the main body.

After the 1970s, the Bretton Woods monetary system collapsed, and the floating exchange rate replaced the fixed exchange rate system. Later, everyone thought that this did not meet the needs of national or regional economic development, so the purchasing power parity was used to determine the exchange rate of the currency, of course, the purchasing power parity theory can only theoretically explain the exchange rate of the currency, and the market exchange rate is another thing, so after the mid-1980s, the purchasing power parity theory was replaced by the neoclassical theory (**, interest rate differential, comprehensive evaluation of the amount of central bank bills).

All of this is a theoretical pricing of the exchange rate.

In the mid-1970s, the theory of financial market transactions was rapidly established, which included the redefinition and practical verification of the efficiency market theory (the theory of market all-encompassing), the establishment and practical verification of the theoretical model of option pricing, and the management theory of modern banking and global finance

1. The currency issuing authority's mandatory exchange rate pricing of the currency and the range of fluctuations allowed in this pricing, such as RMB, New Taiwan dollar, Hong Kong dollar, Malaysian ringgit, Argentine peso, etc., although these currencies are not circulating, they still have to be exchanged under the first conditions; As for fully freely convertible currencies, such as the yen, the euro, the pound sterling, etc., although their issuing authorities do not enforce the exchange rate and the fluctuation range of the exchange rate, they will have a bottom line, what is the highest and lowest exchange rate of the currency, beyond the bottom line, the currency issuing authority or the closest **partner** will intervene, the most obvious is the yen, when the yen is close to 100, Japan ** will intervene, and when the yen exceeds 130, The rest of Asia will be unhappy and will negotiate with Japan, or even quietly raise a large amount of yen themselves.

2. In the market, large institutions and banks determine their exchange rates according to their foreign exchange assets and market risks, interest rate risks, policy risks and other factors, because financial institutions should ensure the safety and liquidity of their funds.

Customization of exchange rates under the gold standard.

The gold standard refers to the monetary system that has been the standard, and we know that it has a unique hedging and storage function as a kind of "currency" used in the world. Under the **-based system, the value of gold coins in circulation and **the same banknotes can be purchased and exchanged**, and gold coins and ** can be exported into the country.

Under this system, each country sets the purity of its own gold coins, because the difference in the value of ** lies in the purity of the gold itself. Therefore, each country will set different conditions for the purity of its own **, and generate foreign exchange rates. For example, the purity of a gold coin minted in one country is grams, while the purity of a gold coin minted in another country is 1 gram.

Then the exchange creates a difference, which in turn creates an exchange rate.

1. Use ** to stipulate the value represented by the currency, each currency unit has a legal gold content, and the currencies of various countries have a certain price ratio according to the weight of the ** they contain.

2. Gold coins can be minted freely, and anyone can hand over the gold bars to the National Mint to mint gold coins according to the gold content of the standard coin.

3. Gold coins are the currency of unlimited legal compensation, and have the right to unlimited means of payment.

4. The currency reserves of various countries are **, and the international settlement is also used**, which can be freely exported and imported.

5. Because it can be freely transferred between countries, this ensures the relative stability of the foreign exchange market and the unity of the international financial market.

There are two theories used to explain the question of determining the exchange rate.

1. Purchasing power parity theory.

Purchasing power parity states that currency exchange rates should be based on the relative prices of goods between each country, that is, the exchange rate of two currencies should be equal to the proportion of the price level of the two countries (measured as a fixed package of goods and services). Therefore, if prices rise or inflation occurs, the currency should depreciate and be compensated accordingly.

2. The theory of exchange rate parity.

Interest rate parity states that there should be an arbitrage between the exchange rate and the interest rate. It means that the appreciation or depreciation of a currency should be offset by a change in interest rates.

For example, if the interest rate of the US dollar is higher than that of the yen, then according to the theory of interest rate parity, the US dollar should be ** against the yen. The rationale for this is that since there is interest to be paid on holding the yen, investors need to be compensated by the exchange rate**.

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 different currency areas.

IntroductionUsually, 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 in the European Union, the franc in the Economic Community of West African States, and the Latin Union in the 19th century, which has a different name but can circulate freely within the Union.

A country can choose the currency of another country as legal tender, for example, Panama chooses the US dollar as legal tender. Different currencies may also use the same name, for example, before France and Belgium used the euro, they and Switzerland were both called francs. For example, 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 British pound, and they can be traded with each other in other parts of the United Kingdom, but only the English British pound is the internationally recognized trading currency, and other versions of the British pound may be refused to accept after being taken out of the United Kingdom.

Floating exchange rate system.

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 still implement the pegged exchange rate system, and most of their currencies are pegged to the US dollar, the Japanese yen, the French franc, 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 each country is based on.

The supply and demand of foreign exchange in the foreign exchange market, the result of self-fluctuation and adjustment. At the same time, the change in foreign exchange supply and demand caused by a country's balance of payments is the main factor affecting the change of exchange rate Countries with a surplus in the balance of payments, the supply of foreign exchange increases, and the foreign currency and exchange rate fall Countries with a deficit in the balance of payments have an increase in the demand for foreign exchange, foreign currencies and exchange rates.

The fluctuation of the exchange rate is a normal phenomenon in the foreign exchange market, and the rise of a country's currency exchange rate is the appreciation of the currency, and the decline is the depreciation.

First of all, how is the exchange rate generated? The earliest exchange rate was created because when countries traded goods and commodities in their respective currencies, they were required to pay each other's currency.

Second, what is an exchange rate? The exchange of two currencies forms a ratio, which is the exchange rate. For example, if we do ** between China and the United States, if American goods are exported to China, what currency do we use to settle with it?

It depends on the terms of the contract, and it may be settled in RMB or USD. If the payment is made in US dollars, it is necessary to convert the RMB into US dollars according to an exchange rate, and then exchange it at the bank and pay it to the foreign businessman. This seems to be a simple exchange act, but in fact, there is a lot of knowledge in it.

We choose in what currency and when to pay in the contract; Whether the payment is made at the exchange rate agreed upon at the time of signing the contract or at the current exchange rate** at the time of actual payment will have an impact on the profit of the transaction. When some enterprises make transactions with foreign investors, they have already made profits in their accounts, but when it comes to paying foreign exchange, they find that they have lost money instead of making money. Why?

Because at the time of payment, the international exchange rate** has changed significantly.

Third, what affects the exchange rate? The economic circles generally believe that what affects the fundamental trend of a country's exchange rate is a country's comprehensive strength and economic growth rate. To put it simply, the rapid growth of a country's economy means that there are a large number of opportunities to get rich in economic activities, which will drive the demand for the country's currency at home and abroad, which will be reflected in the exchange rate as the rise of the exchange rate of a country's currency and the appreciation of the currency.

On the contrary, if the economy is in recession, political instability, lack of security, and loss of credit, it will lead to the exchange rate. The exchange rate has now become a comparison and contest of comprehensive strength between countries. With the development of China's economy, the exchange rate is a common sense that everyone needs to master.