August 11, 2015RMBRightU.S. dollar exchange rateThere was a historic adjustment, which fell to 62298, the biggest one-day drop in nearly 20 years. At the time, people were interested inRMBThe trend is cautious and worriedRMBFurther depreciation. Now, however, six years laterRMBThe reversal of the value of the currency brought surprises, especiallyRMBRightU.S. dollar exchange rateIn November 2023, it has accumulated more than 2,000 points, successfully surpassingEurosto become the second largest in the worldCurrency, second only to the US dollar. So, how did this huge reversal happen?
RMBExchange rateIt is affected by a combination of factors, the most important of which is the balance of payments. ChineseBalance of payments surplusIn the first 10 months of 2023, it reached 1$2 trillion, a record high. This is mainly thanks to our countryEconomyThe strong recovery and the active promotion of the "dual circulation" strategy have boosted domestic consumption andInvestmentsproportion, reducing dependence on external demand. These factors reinforceRMBsupply and demand, promotedRMBExchange rateTarget**.
RMBExchange rateThe ** is also subjectedInterest rateslevel of influence. One year in ChinaDeposit interest ratesKeep it at 15% compared to the United StatesFederal** Interest RateFrom 025% to 125%, ECB'sDeposit interest ratesthen from -05% to -075%。This means our country'sInterest ratesThere are obvious advantages over the United States and Europe, so that:RMBAssets are more hasInvestmentsattractiveness, increasedRMBdemand, drivenRMBExchange rateTarget**.
In addition,U.S. dollar indexThe ** is also availableRMBExchange rateThe ** provides the momentum. United StatesEconomyGrowth is slowing,Inflation rateRising fiscal deficits, widening fiscal deficits, and intensifying political divisions have weakened confidence in the dollar, resulting inU.S. dollar index**。This makes the otherCurrencyRelatively more valuable, added othersCurrencydemand, drivenRMBetcCurrencyTarget**. Exchange rate
In summary,RMBExchange rateThe reversal is the result of a combination of factors, including:Balance of payments surplusInterest ratesLevel advantage andU.S. dollar indexetcThese factors reflect ChinaEconomystrong performance andRMBintrinsic value.
RMBExchange ratereversal for both domestic and foreignEconomyIt has important implications, but it also brings some challenges.
First of all,RMBExchange rateIt has reduced the cost of imports and increased the purchasing power and welfare level of domestic residents. RMBAppreciation means useRMBIn exchangeForexThe cost is reducedImported goodsKimonoThe relative decline of the ** of the service. This allows domestic consumers to buy more foreign goods with less moneyKimonoto improve their quality of life and well-being.
Secondly,RMBExchange rateFor domestic production enterprises, it is conducive to reducing production costs and improving competitiveness and profitability. BecauseRMBAppreciation means useForexIn exchangeRMBThe cost of exporting goods increasesKimonoRelative**. This is a bad thing for foreign consumers, who need to spend more money on Chinese goodsKimonoThis reduces the demand for Chinese goods. Domestic enterprises are facing the pressure of declining export revenues and need to improve product quality, innovate technology and open up markets to enhance their competitiveness.
In addition,RMBExchange rateIt will also help to enhance China's international status and enhance its international influence. RMBAppreciation means an increase in purchasing power, which improves the international ** andInvestmentssettlement capacity. This is a good thing for the international community, they can use it moreRMBParticipate in Chinese markets and projects to enhance cooperation and mutual trust with China.
However,RMBExchange rateThe large number of ** has also brought some unfavorable aspects, which require us to remain vigilant and precautionary. First of all,RMBA sharp appreciation may trigger deflationary pressures in the country, decreasingEconomygrowth rate. Due toRMBAppreciation leads to domestic goodsKimonoThe relative decline in business is not good for domestic producers. Producers need to produce less income at a higher cost, reducing their motivation to produceInvestmentsWill.
Secondly,RMBExchange rateThe substantially ** may trigger an increase in international ** frictionEconomyof uncertainty. RMBAppreciation leads to a decrease in China's export competitiveness and an increase in import competitiveness, which is a disadvantage for foreign producers. They need to face more fierce market competition, more import substitution and fewer export opportunities, which will lower theirsProfitsand employment opportunities.
To sum up, we should strengthen domestic structural reforms, improve production efficiency and quality, reduce production costs, increase product added value, and improve the competitiveness of enterprises. At the same time, attention should be paid toRMBExchange rateto avoid the negative impact of excessive appreciation. We also need to strengthen the monitoring and judgment of the external environment, and respond to international frictions and conflicts in a timely mannerEconomyRisk. KeepRMBExchange rateis relatively stable and well-maintainedInternational Economyrelations, will be beneficial to ChinaEconomyhealthy development and globalEconomystability.