Generally speaking, the intrinsic value of money is closely related to the external value, and the intrinsic value of money is the basis for determining the external value. The traditional international financial theory represented by purchasing power parity holds that "after exchange rate conversion, excluding transportation costs and other necessary transaction costs, the internal value of money should be consistent with the external value", and the appreciation of RMB exchange rate will curb domestic inflation. The rise of RMB exchange rate and the decline of imported raw materials and products denominated in RMB will push down domestic prices. Theoretically, the appreciation of RMB exchange rate will lead to the decline of domestic price level. However, in recent years, domestic prices have obviously risen for several periods, highlighting the phenomenon of "RMB value paradox" of "internal depreciation and external appreciation".
Investment, consumption and export are the three troikas that drive economic growth. Consumption is the final link of social production, the purpose of social production and the ultimate driving force of economic growth. Sustained and stable economic growth requires corresponding consumption growth. At present, China's economic growth is too dependent on investment. The final result of China's economic policy of "paying more attention to investment than consumption" is that cakes grow rapidly, but residents can't get cakes or eat them, so the extra cakes have to be exchanged for RMB, a kind of voucher for sharing cakes. The increase of cake coupons will inevitably lead to a decline in the unit value of coupons. Therefore, the RMB's "internal depreciation and external appreciation" seems contradictory, but it is actually consistent.