Changes in the level of exchange rates Currency appreciation or depreciation Impact on foreign trade

I personally understand.

Because the only international currency is the US dollar, everything must be measured in the US dollar.

The appreciation of the national currency will discourage exports and encourage imports.

The appreciation of the national currency means that the exchange rate against the US dollar increases, but the domestic price will not decrease, and our domestic inflation will be the same. But externally, it appreciates, so foreigners have to spend more dollars to buy the same goods. People don't want to.

And if you reduce the price, so that foreigners still spend so many dollars to buy your goods, but when you receive dollars to convert into RMB, you can only exchange for less RMB, so you are unwilling.

Therefore, currency appreciation inhibits exports.

And what about encouraging imports?

Because your currency has appreciated against the US dollar. In the past, you could only exchange 1,000 yuan RMB for very few dollars, but now you can exchange a lot of dollars. And the international** is all in dollars, so you can buy more things.

So currency appreciation encourages imports.

And what about currency depreciation? The opposite is true of currency appreciation. An analogy with the above situation is clear.

I hope it helps, and if I'm wrong, be sure to let me know.

At present, the increase in the exchange rate of the renminbi against the US dollar means that the renminbi appreciates, and if the renminbi appreciates, it is good for imports and domestic consumers, but it is not good for exports. For example, if the domestic price of a product is 80 yuan (RMB), and the exchange rate of RMB against the US dollar is 1:8, if other factors are not considered, the price of the product will be 10 US dollars when it goes to the United States.

After the appreciation of the RMB, with the same RMB as before, you can exchange more US dollars, or the above goods, domestic 80, due to the exchange rate, the price in the United States is 10, now the RMB has appreciated, more US dollars can be exchanged, so that the price in the United States is more than 10 yuan, expensive, consumers' desire to consume may be low.

The impact of differences in economic growth rates on exchange rate movements is manifold

One is that a country's high economic growth rate means that income increases, and the level of domestic demand increases, which will increase the country's imports, resulting in a current account deficit, which will make the national currency exchange rate**.

Second, if the country's economy is export-oriented, and economic growth is to produce more export products, the growth of exports will compensate for the increase in imports and ease the pressure on the exchange rate of the national currency**.

Third, a country's high economic growth rate means that labor productivity increases rapidly and costs decrease, thus improving the competitive position of domestic products and helping to increase exports and inhibit imports; And the high economic growth rate makes the country's currency favored in the foreign exchange market, so the country's currency exchange rate will have an upward trend.

Extended information: 1. If the country's economy grows rapidly, it will lead to the appreciation of the local currency externally and the depreciation of the domestic currency. Here's why:

1. It is not the currency that drives the economy, but the economy that drives the currency. Many people have always believed that the economic boom is largely due to the over-issuance of currency, but in fact, it is slightly biased. According to a research report in Business Times, the correlation coefficient between the growth rate of money and the rate of economic growth is only, which means that the effect of money on economic growth is actually very limited.

2. The economy drives high demand growth. For a long time, domestic economic growth was driven by fixed asset investment, which in turn drove the demand for credit. Therefore, when the growth rate of fixed asset investment soars, credit will be injected in large quantities, which will eventually lead to excess liquidity and increased domestic inflationary pressures.

3. The economic improvement makes the local currency have external appreciation pressure. The high growth of the economy has made global assets optimistic about the country's investment opportunities, so they will exchange their money into the country's currency for investment (assuming that the foreign exchange flow is not fully liberalized), resulting in a shortage of the country's currency and upward pressure.

4. The impact of internationalization on currency. The rapid growth of the economy also means the enhancement of the country's comprehensive strength, at present, China is also exploring the path of RMB internationalization, at present, in ASEAN, Russia and other places, the RMB has a certain status, in addition to we have signed currency swap agreements with many countries, which are all efforts to internationalize the RMB. This will make the international credit of the renminbi better and better, and become more and more sought after by foreign currencies, and under the premise of monetary independence, the status of the renminbi will become more and more active.

Impact: (1) Affect the ** or decrease in prices.

Immediately after the exchange rate changes, there will be an impact on the ** of imported goods. First of all, there is a change in imported consumer goods and raw materials**, and then there is also a change in goods processed from imported raw materials or domestic goods** that are similar to imported goods.

2) Affect the production sector of export goods under certain circumstances.

When foreign currency appreciates, it will make imported commodities more expensive, which will increase the production costs of export commodity producers who mainly import raw materials, weaken their competitiveness in the international market, and will be more beneficial to export commodity producers who mainly import raw materials.

3) The decline in the value of the local currency has the effect of expanding domestic exports and curbing domestic imports, so that it is possible to reverse the ** balance of payments deficit.

The calculation of product cost will produce continuous profit adjustment due to the continuous change of exchange rate, which may lead to a decrease or rapid increase in foreign orders due to too much change, resulting in the inability of business to operate normally!