Foreign exchange problem

(a) Factors affecting exchange rate fluctuations

There are many factors that affect the market exchange rate, which can be summarized as economic and political aspects. The economic situation of a country is mainly manifested in the growth level of production, balance of payments, bank interest rate level, employment and so on. The advantages and disadvantages of these aspects are the fundamental internal causes of the exchange rate trend; In addition, due to the special status of the US dollar, the economic situation of the United States is a basic external cause of the exchange rate trend of various countries. There is also the country's long-term economic prospects, which will also affect the long-term trend of its currency in the market.

(B) the impact of political factors on the foreign exchange market

Changes in the international and domestic political situation have a great influence on the exchange rate. When the situation is stable, the exchange rate is stable. When the situation is turbulent, the exchange rate falls. For example, the 9 1 1 incident, the US-Iraq war, the military war, the regional situation and other political events have a great influence on the currency trend. Generally speaking, the more sudden political events, the greater the impact on the currency trend.

1. Differences in economic development and growth: Differences in economic growth between countries or regions will lead to changes between the two currencies. For example, from 2000 to 200 1 year, the euro was weak against the dollar and the American economy was in full swing. In 2002, the American economy entered a recession. Although the economic situation in Europe is not as good as that in the United States, the economic decline in the United States is more obvious. Therefore, the exchange rate of the euro rushed to 1.0000 in the middle of the year, which was difficult for many years.

2. Impact of interest rate: If the interest rate of a country's currency rises, it will generally strengthen the country's currency.

3. The impact of international capital flows: low-interest currencies flow to high-interest currencies. For example, in 2003, the interest rates of currencies such as the Australian dollar, the British pound and the euro were much higher than the US dollar. Therefore, many market investors are willing to hold these currencies and buy bonds and foreign exchange issued by these countries, thus creating a strong situation of these currencies against the US dollar.

4. Market expectation: The psychological expectation of participants in the foreign exchange market will have an important impact on the trend of the currency. Participants will put the water level of money near the resistance or support that the market generally thinks, so the more the key water level that market participants value, the more likely it will become an important price of money.

5. Intervention of monetary authorities: The government's fiscal policy or foreign exchange policy, as well as the central bank's monetary policy, have a great influence on the trend of the country's currency. For example, the Bank of Japan frequently intervenes in the yen exchange rate.

(D) the need to pay attention to economic data

1. Overall indicator:

A. Gross national product

B. Sales rate of new houses

C. purchasing managers' index

D. Capital expenditure

E. Commodity trade balance

F. Index of leading economic indicators

G. Employment report

2. Retail indicators:

A. Retail

B. Personal income and consumption expenditure