Exchange rate, also known as foreign exchange rate, foreign exchange rate or foreign exchange market, refers to the exchange rate between two currencies, and can also be regarded as the value of one country's currency against another's currency. Specifically, it refers to the ratio or parity between one country's currency and another country's currency, or the price of another country's currency expressed in one country's currency.

Exchange rate changes have a direct regulatory effect on a country's import and export trade. Under certain conditions, the devaluation of the local currency, that is, lowering the exchange rate, will promote exports and restrict imports; On the other hand, the appreciation of the local currency, that is, the rise of the exchange rate, plays a role in restricting exports and increasing imports.

economic impact

(1) Impact on trade balance: Impact of exchange rate on import and export: The rise of exchange rate (direct quotation) can promote exports and restrain imports. (Foreign exchange rate rises, local currency rate falls)

(B) the impact on non-trade balance of payments

1. Impact on the balance of intangible trade: the exchange rate of a country's currency declines, the purchasing power of foreign currency increases, and goods and services are cheap. The decline in the purchasing power of local currency and the increase in the prices of foreign goods and services are conducive to improving the balance of payments of tourism and other services in the country.

2. Impact on unilateral transfer income: If a country's currency exchange rate falls, if domestic prices remain unchanged or rise relatively slowly, it will have an adverse impact on the country's unilateral transfer income and expenditure.

3. Impact on capital inflow and outflow: Exchange rate has little impact on long-term capital flow. In the short term, the exchange rate depreciates and capital flows out; The appreciation of exchange rate is beneficial to capital inflow.

4. Impact on official reserves: ① The change of domestic currency directly affects the increase and decrease of domestic foreign exchange reserves through capital transfer and the increase and decrease of import trade volume. (2) The exchange rate of reserve currency falls, which makes the real value of foreign exchange reserves of countries that maintain reserve currency suffer losses. Reserve countries have reduced their debt burden due to currency devaluation and benefited from it.

Tips: The above information is for reference only and does not represent any suggestions.

Reply time: 2022-0 1- 19. Please refer to the latest business changes announced by Ping An Bank in official website.