Exchange rate can be understood as price. When the exchange rate rises, the price will rise.
There are two main ways to express the exchange rate: one is based on how much local currency the unit foreign currency is converted into, that is, direct quotation, for example, China's 100 USD =637.35 RMB. In this way, the rise of exchange rate means that the unit foreign currency is converted into more local currency, that is, the local currency depreciates; The other is how much foreign currency the local currency is converted into, which is called indirect pricing method. Under this representation, the rise of foreign exchange rate means the appreciation of local currency.
Most countries in the world quote directly, so there is no special explanation. The direct purchase price is the default purchase price, and the exchange rate rises to the depreciation of the local currency. Generally speaking, the exchange rate refers to the conversion of foreign currency into RMB.
1. A floating exchange rate of one currency means a downward exchange rate of another currency. A floating yen means a devalued dollar. Under the floating exchange rate system, foreign exchange has completely become a special commodity in the international financial market, and the exchange rate has become the price for buying and selling this special commodity.
Foreign exchange receipts and payments between countries due to the settlement of creditor's rights and debts. The total foreign exchange supply and demand has changed. This change is one of the main factors affecting exchange rate fluctuations.
Two, in the exchange rate, there are two main forms:
One is expressed by how much local currency the unit foreign currency is converted into, which is a direct quotation, such as 100 USD =637.35 RMB in China. In this way, the rise of exchange rate means that the unit foreign currency is converted into more local currency, that is, the local currency is depreciated;
The other is how much foreign currency the local currency is converted into, which is called indirect pricing method. Under this representation, the rise of foreign exchange rate means the appreciation of local currency.
Third, exchange rate changes will cause changes in the prices of import and export commodities, thus affecting a country's import and export trade. The devaluation of a country's currency is conducive to increasing its exports and curbing its imports. On the other hand, the appreciation of a country's currency is conducive to imports and is not conducive to exports; The impact of exchange rate changes on non-trade balance of payments is just like its impact on trade balance of payments.
When a country's local currency exchange rate drops and the foreign exchange rate rises, it is conducive to promoting its exports, curbing imports, and making its export industries and import substitution industries flourish, thus accelerating the development of the entire national economy, increasing domestic employment opportunities and increasing national income.