InFinanceIn the market, the US dollar has always been regarded as the most important in the worldCurrencyOne. However, recent discussions about the overvalued US dollar have raised concerns. According toGoldman SachsThe report of the US dollar is relative toRMBofExchange rateIt is overestimated by about 18%. However, after carefully examining the reports and analyzing the data, we found that this conclusion is not entirely accurate. Actually, the dollar is relative toRMBThe overestimation could be well over 18 percent and could be as high as 40 percent. This article will examine this topic from multiple perspectives.
1. The meaning of the weighted average
in the discussionExchange rateproblems, we need to pay attentionU.S. dollar indexThis is an important measure. U.S. dollar indexIt is used to reflect the US dollar pairA basket of currenciesComprehensiveExchange rateAn indicator of the degree of change. ThisA basket of currenciesIncluding the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc, with the euro having the largest weight, occupying the entire basketCurrencyof 576%。Therefore,Goldman SachsThe stated 18% overvaluation of the dollar is actually relative to these sixCurrencyThe weighted average does not represent the sameRMBActuallyPurchasing powerCompare.
2. The shortcomings of the U.S. dollar index
However,U.S. dollar indexIt is not includedRMBin. This leads to:U.S. dollar indexIt is not possible to accurately measure the dollar relative toRMBActuallyPurchasing power。According toWorld BankPublished data, 2022RMBwith dollarsPurchasing powerThe ratio is about 399, that is, you need to pay 399 yuan to buy a basket of goods in ChinaRMB, while in the United States you need to pay $100. Based on this data, it can be concluded that the US dollar is relative toRMBofPurchasing powerThe degree of overestimation can be more than 40%, far exceedingGoldman Sachs18% mentioned.
1. The internationalization process of RMB
Although relative to the US dollar,RMBThere is a greater underestimation, but that doesn't meanRMBIt should appreciate substantially. RMBofExchange rateAscension needs to accompany our countryEconomyThe sustainable and steady development of the country. Excessive appreciation in the short term may not be detrimentalRMBThe process of internationalization is even susceptible to manipulation by international speculators.
2. Differences between China and the United States
As the world's largest exporter of goods, China needs to maintain a certain competitiveness in order to seize international market share. Therefore,RMBofExchange rateIt is very important for China to remain relatively stable and have a certain competitiveness. In contrast, the United States, as the world's largest importer of goods, needs the U.S. dollar to be relatively overvalued in order to import goods at low cost.
Relative to the US dollarRMBofExchange rateThe re-evaluation of the problem, we can draw the following conclusions:
1.USD Relative toRMBThe overestimate is likely to be more than 40 percent, well above the 18 percent estimate.
U.S. dollar indexAs a measureU.S. dollar exchange rateThere are inadequacies in the indicators and more factors need to be considered, especially including:RMBinCurrency
RMBofExchange rateAscension needs to be accompaniedEconomyand need to consider the balance of relations with China and the United States.
Finally, we need to be clearExchange rateThe issues are complexEconomywithFinancefactors, and are affected by various countriesMacro policyimpact. Therefore, for the US dollar withRMBExchange rateAny estimates need to be treated with caution and cannot be generalized. At the same time, for individualsInvestmentsCorrectly understoodExchange rateproblems, and according to their ownInvestmentsdemand and risk tolerance to make a responseInvestmentsIt's the smart way to make a decision.