Liquidity, fundamentals, expectations, etc. all have an impact.

Exchange rate changes can affect the stock market from three aspects: one is liquidity, two is fundamentals, and three is expectations.

1. The impact of interest rates on liquidity: The central bank’s monetary policy is generally loose, and the open market can operate every day. Unless the central bank’s policy direction changes, the exchange rate will not be significantly affected.

2. The impact of rates on fundamentals: What is related to this is not the bilateral exchange rate of the local currency against the US dollar, but the real effective exchange rate. The real effective exchange rate affects enterprises (especially enterprises in the secondary industry) The rise in profits has a negative impact, and the decline in real effective exchange rates helps improve corporate profits.

3. The impact of rates on expectations: After the exchange rate changes on August 11, the exchange rate dropped and the stock market fell, which caused the widespread misunderstanding in the market that the exchange rate is stable and the stock market has opportunities.

The impact of exchange rate on the stock market is, first, liquidity. The exchange rate affects foreign exchange possession, which may have an impact on market liquidity. The second is fundamental. The production of corporate financial reports is affected by exchange rate changes. The impact also has an impact on the stock market. The third is that the formation of market expectations is affected by exchange rate changes.