How does the value of the local currency change when the foreign exchange rate rises or falls?

Conversely, when the foreign exchange rate falls, the local currency appreciates.

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The size of the currency is determined by the country.

The purchasing power of the currency.

It's up to the market to decide.

Looking at the international analysis, changes in the political situation of a country and the world will have an impact on the foreign exchange market. of the political situation.

Changes generally include political conflicts, military conflicts, elections and regime changes, and the impact of these political factors on the exchange rate is sometimes large, but the impact is generally short-lived. fluctuations in foreign exchange rates, although ever-changing, and other traders.

The product is the same. In the final analysis, it is determined by supply and demand. In the international foreign exchange market, when there are more buyers than sellers of a certain currency, buyers compete to buy, and the buyer's power is greater than the seller's power; The seller is odd and can live, and ** must be on.

Litre. On the other hand, when sellers see poor sales and compete to sell a certain currency, and the seller's power prevails in the market, the exchange rate will inevitably **.

There are two ways of indirectly pricing and direct pricing, and the most commonly used method is the direct pricing method, that is, the amount of RMB that can be exchanged for a certain unit of foreign currency. For example, the RMB exchange rate is RMB, which means that 1 US dollar can be converted into RMB. If the foreign exchange rate reaches 70,000, it means that 1 US dollar can be exchanged for 70,000 RMB, the local currency exchange rate**, the RMB depreciates, and the foreign currency appreciates.

Factors affecting the local currency exchange rate include the balance of payments, inflation, interest rates, etc., the balance of payments is one of the most direct factors affecting the exchange rate, generally in the case of a surplus, due to the increase in demand for domestic goods or services in foreign markets, capital inflows, so the local currency exchange rate will rise. Conversely, in the case of a deficit, the demand for the country's currency in the international market will fall, and the local currency exchange rate will fall. When the RMB is inflated, it means that the value of the local currency decreases, the purchasing power of the same denomination of the RMB decreases, and the foreign exchange rate also increases.

As a basic reflection of a country's borrowing situation, interest rates play a decisive role in exchange rate fluctuations. The level of national interest rates will affect the inflow or outflow of market funds, and generally when the domestic interest rate is higher than that of other countries, the inflow of funds and the rise of the local currency exchange rate. Conversely, countries with low interest rates are prone to capital outflows, leading to a depreciation of the currency.

An exchange rate is the rate at which two currencies are exchanged, and can also be considered 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.

In the financial market, there are two forms of exchange rate expression, one is direct pricing, which is expressed in terms of how much foreign currency is converted into local currency, and the other is indirect pricing, which is expressed in how many foreign currencies are converted into units of local currency. The vast majority of countries in the world (including China) use the direct pricing method, so it is not specifically stated that it refers to the direct pricing method.

The word exchange rate can be understood as **, under the direct pricing method (such as China), 1 US dollar = RMB, when it becomes 1 US dollar = 8 RMB, this is the exchange rate (**) rises, which is obviously the depreciation of RMB, in other words, the decline of RMB ** (exchange rate). Therefore, under the direct pricing method, if the foreign exchange rate rises, the local currency exchange rate falls; Foreign exchange rates fell.

It is the rise in the exchange rate of the local currency.

The situation you are talking about is an increase in the exchange rate of the local currency (i.e., an increase in the exchange rate of the national currency), an increase in the value of the local currency, and a depreciation of the foreign currency, which is a decrease in the exchange rate under the direct pricing method.

Direct pricing method.

, the exchange rate rises, and the local currency depreciates. The direct pricing method is also known as the payable pricing method.

It is based on a certain unit of foreign currency to calculate how many units of national currency should be paid. An increase in the exchange rate means that the amount of the local currency converted into a certain unit of foreign currency is more than that of the previous period, indicating that the value of the foreign currency has risen or the value of the local currency has increased**.

Extended Information:1Direct quotation, also known as givingquotation.

This method is based on a certain unit of foreign currency, which is converted into a number of units of domestic currency. It is equivalent to calculating how much local currency should be paid for the purchase of a certain unit of foreign currency, so it is called the price payable method. Under the direct pricing method, the foreign currency is the base currency and the national currency is the quote currency; The amount of the quote currency (national currency) changes with the change in the value of the foreign currency or the national currency.

The vast majority of countries in the world, including China, use the direct pricing method. In the international foreign exchange market, the Japanese yen, the Swiss franc.

The Canadian dollar and the like are all direct pricing methods, such as the Japanese yen is one dollar.

against the Japanese yen. The direct pricing method, also known as the payable pricing method, is based on a certain unit of foreign currency as a standard to calculate how many units of domestic currency should be paid. It is equivalent to calculating how much local currency should be paid for the purchase of a certain unit of foreign currency, so it is called the price payable calendar.

The vast majority of countries in the world, including China, currently use the direct pricing method.

2.Principle. The more valuable the national currency is, the less the unit of foreign currency can be exchanged for the national currency, and the smaller the exchange rate value; Conversely, the less valuable the national currency, the more the unit of foreign currency can be exchanged for the local currency, and the greater the exchange rate.

Under the outright pricing method, the rise and fall of the foreign exchange rate and the value of the national currency.

The change is inversely proportional: the local currency appreciates and the exchange rate falls; The local currency depreciates and the exchange rate rises. Most countries use the direct pricing method. Most of the exchange rates in the market are also directly quoted. Such as: US dollar against Japanese yen, US dollar against Hong Kong dollar.

USD/CNY, etc.

Under the direct pricing method, the smaller amount is the foreign exchange ** price, and the larger amount is the foreign exchange selling price, with a difference of 2-5 points during the period. Some prices are only marked in the middle of the price. In our country, the RMB exchange rate.

The direct pricing method: 1 US dollar = RMB yuan.

3.Effect. Under the direct pricing method, if the amount of local currency converted into a certain unit of foreign currency is more than that of the previous period, it means that the value of the foreign currency has risen or the value of the local currency has increased**, which is called an increase in the foreign exchange rate; On the contrary, if you want to use less local currency than the original to exchange the same amount of foreign currency, this means that the value of the foreign currency** or the value of the local currency has risen, which is called the foreign exchange rate**, that is, the value of the foreign currency is proportional to the rise and fall of the exchange rate.

The RMB exchange rate has depreciated sharply, and the response is as follows.

The most direct impact of the adjustment of foreign exchange reserves is to increase or lower the foreign exchange reserves of commercial banks, and then reduce or increase foreign exchange**. If the depreciation of the renminbi is too large, the foreign exchange reserves can be reduced, the foreign exchange can be increased, and the corresponding reverse adjustment measures can be taken to effectively curb the depreciation momentum of the renminbi.

The monetary authority has already announced a reduction in reserves from 9% to 8%, and this time the monetary authority adjustment has given a clear policy signal to those who bet unilaterally, suggesting that they will take steps to maintain the basic stability of the yuan.

If the foreign exchange risk reserve ratio is raised, it will lead to an increase in forward transaction costs, which will increase the cost of shorting in foreign exchange transactions, thereby easing the pressure on the depreciation of the RMB. In 2015 and 2018, ** banks increased the foreign exchange risk reserve ratio for forward foreign exchange settlement business to 20%, thereby curbing the pro-cyclical effect of forward foreign exchange sales by enterprises.

The central bank also subsequently announced the reduction of the foreign exchange risk reserve ratio, which is equivalent to increasing liquidity to the market, so it can ease the depreciation pressure on the US dollar, so that the exchange rate of the RMB against the US dollar remains basically stable at a relatively balanced level.

Following this news, the CNH quickly gained 200 basis points against the US dollar at a key position and broke through.

Commercial banks use swap transactions to obtain US dollars from ** banks and then sell them in the spot market to adjust the supply and demand of money and maintain the stability of money.

This practice was adopted during the "exchange rate reform" in 2015, and the sharply depreciated renminbi was stabilized, although there is no clear policy, but traces of this practice can be seen in direct and consignment remittance data.

First of all, we should maintain a good attitude, and then wait for the macro control of the relevant departments, and then avoid investment and purchase in a short period of time, so as to cope.

The first point is that the best way to have a serious depreciation is to pay attention to the changes in the economy as a whole, and the second point is that if you want to deal with it, you need to take a lot of measures and implement it slowly, and the third point is that you should have corresponding countermeasures.

You can buy financial products, buy **, ensure your own interests, get effective protection, you can also start a business to do some good projects, so that the overall cost of entrepreneurship is relatively low, you can exchange it for foreign currency to manage money, and you should consider it according to your own situation to make corresponding treatment.

Summary. Conversely, when the foreign exchange rate falls, the local currency appreciates.

Expand on it for you:

The size of the currency is determined by the country.

The purchasing power of a currency is determined by the market.

How the base currency changes when the foreign exchange rate rises.

If the foreign exchange rate rises, the value of the foreign exchange will appreciate, then the foreign currency can be exchanged for more local currency, so the local currency will depreciate on the contrary, the foreign exchange rate will fall, the local currency will appreciate to expand it: the value of the currency is determined by the country, and the purchasing power of the currency is determined by the market.

What about the base currency.

The base currency appreciates.