1. What does the RMB exchange rate mean?
There are two ways of exchange rate: direct quotation and indirect pricing, in which direct quotation is widely used. If expressed by direct quotation, the rise of RMB exchange rate means that more RMB can be exchanged for one unit of foreign currency, so RMB depreciates. On the contrary, RMB exchange rate decreases, RMB appreciates, and the local currency of convertible foreign currency decreases.
Second, the factors affecting the change of RMB exchange rate
1, inflation
Under normal circumstances, countries with high inflation will reduce the purchasing power of their currencies and devalue them. If China's inflation rate is higher than that of the United States, the value of RMB against the US dollar will decline and the RMB exchange rate will rise. On the contrary, when the inflation rate in the United States is higher than that in China, then the dollar depreciates and the RMB appreciates accordingly.
2. Supply and demand
The relationship between supply and demand in the foreign exchange market will affect the foreign exchange rate. When the supply is less than the demand, the exchange rate will rise, and when the supply is greater than the demand, the exchange rate will fall.
3. Regulation by the Central Bank
The central bank is also a participant in the foreign exchange market. The central bank participates in foreign exchange transactions not for profit, but to stabilize the exchange rate. The more foreign exchange reserves the central bank holds, the greater the supervision.
Under normal circumstances, the RMB exchange rate rises and the RMB depreciation is beneficial to the country's exports, but not to the people. Currency devaluation means that people's purchasing power of holding money declines. Therefore, the RMB exchange rate usually keeps a balance between the two. The above content about what RMB exchange rate means, I hope it will help you. Warm reminder, financial management is risky and investment needs to be cautious.