GDP rises, so what will happen to the value of the renminbi

The People's Bank of China (PBOC) has decided to raise the benchmark interest rate for RMB deposits and loans of financial institutions with effect from September 15, 2007.

The benchmark interest rate for one-year deposits of financial institutions will be raised by one percentage point from the current one percentage point to %; The benchmark interest rate for one-year loans will be raised by one percentage point from the current one; The benchmark interest rates for other grades of deposits and loans have also been adjusted accordingly. The interest rate on personal housing provident fund loans will be raised by one percentage point accordingly.

There have been five rate hikes this year:

The first time: 2007-03-18 The benchmark interest rate of RMB deposits and loans of financial institutions was raised.

The second time: 2007-05-19 The benchmark interest rate for one-year deposits was raised by one percentage point; The benchmark interest rate for one-year loans was raised by one percentage point.

The third time: on July 20, 2007, the benchmark interest rate of RMB deposits and loans of financial institutions was raised by one percentage point.

Fourth: On August 22, 2007, the benchmark interest rate for one-year deposits was raised by one percentage point; The benchmark interest rate for one-year loans was raised by one percentage point.

Fifth: On September 15, the benchmark interest rate for deposits was raised by one percentage point, and the benchmark interest rate for loans was raised by one percentage point.

In the first 4 sessions of the year, the first trading day after each rate hike was up, with an increase of between 1% and 4%.

Bank stocks have risen and fallen, but they have not risen or fallen much, ranging from -1% to 3%.

There is no direct relationship between the two.

There is no inevitable relationship between the level of GDP and the depreciation of the RMB.

A high GDP value indicates a relatively high level of economic development, but it does not determine whether the renminbi will depreciate. It is the inflation rate that determines the depreciation of the currency, and the higher the inflation rate, the greater the probability of depreciation, and the lower the inflation rate, the more difficult it is to depreciate.

Relative to other currencies, the purchasing power of the renminbi has increased. The reason for the renminbi's appreciation is due to internal dynamics in China's economic system and external pressures. Internal influencing factors include the balance of payments, foreign exchange reserves, price and inflation, economic growth and interest rates.

Extended information: Exchange rate, which refers to the rate at which two currencies are exchanged, can also be regarded as the value of one country's currency against another. Specifically, it refers to the ratio or ratio of one country's currency to another country's currency, or the ** of another country's currency expressed in one country's currency.

Exchange rate changes have a direct regulating effect on a country's imports and exports**. Under certain conditions, by devaluing the national currency externally, that is, allowing the exchange rate to rise, it will play a role in promoting exports and restricting imports; On the contrary, the appreciation of the national currency, that is, the decline of the exchange rate, plays the role of restricting exports and increasing imports.

Import and export. 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 increases, that is, the ratio of the local currency to the outside world rises, it is conducive to imports and not conducive to exports.

Prices. 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, all other things being equal, the price of imports is likely to decrease, and the extent to which it affects the general price index depends on the share of imported goods and raw materials in the gross national product.

Capital flows. Short-term capital flows are often more affected by exchange rates. When there is a trend of depreciation of the local currency, domestic investors and foreign investors are reluctant to hold various financial assets denominated in the local currency, and will convert them into foreign exchange, resulting in capital outflow.

At the same time, due to the conversion of foreign exchange, the shortage of foreign exchange will be exacerbated, which will promote the further exchange rate of the local currency. On the contrary, when there is a trend of foreign appreciation of the local currency, domestic investors and foreign investors will strive to hold various financial assets denominated in the local currency, which will trigger capital inflow. At the same time, the oversupply of foreign exchange will lead to a further rise in the exchange rate of the local currency due to the conversion of foreign exchange into the local currency.