Exchange rate changes will cause changes in the prices of import and export commodities, thus affecting a country's import and export trade. The devaluation of a country's currency is conducive to increasing its exports and curbing its imports. On the other hand, the appreciation of a country's currency is conducive to imports and is not conducive to exports; The impact of exchange rate changes on non-trade balance of payments is just like its impact on trade balance of payments.
(b) The impact of exchange rate changes on the domestic price level: First, the impact on the prices of traded commodities; The second is the impact on the price of non-tradable goods.
(c) The impact of exchange rate changes on international capital flows. The influence of exchange rate changes on capital flow is manifested in two aspects: first, after the devaluation of the local currency, the unit foreign currency can be converted into more local currency, which will promote the increase of foreign capital inflow and the decrease of domestic capital outflow; Second, if the external value of the local currency depreciates, the foreign exchange rate will rise rather than rise, which will affect people's expectations of the exchange rate and then cause domestic capital flight.
The influence of exchange rate changes on foreign exchange reserves. The influence of currency depreciation on the scale of a country's foreign exchange reserves; The exchange rate change of reserve currency will affect the actual value of a country's foreign exchange reserves; Frequent exchange rate fluctuations will affect the status of reserve currency.
(five) the impact of exchange rate changes on a country's domestic employment, national income and resource allocation. When a country's local currency exchange rate drops and the foreign exchange rate rises, it is conducive to promoting its exports, curbing imports, and making its export industries and import substitution industries flourish, thus accelerating the development of the entire national economy, increasing domestic employment opportunities and increasing national income.
(vi) The impact of exchange rate changes on the world economy. The exchange rate changes of small countries have only a slight impact on the economies of their trading partners, while the exchange rate changes of freely convertible currencies in developed countries have a greater or even greater impact on the international economy.
Extended data:
A country's financial management authorities make the exchange rate of its own currency change in the direction favorable to its own economy according to the changes in the value comparison between its own currency and foreign currencies, and sometimes adjust the exchange rate by raising or lowering the parity level of its own currency, so as to make its own currency appreciate or depreciate.
Exchange rate adjustment is different from the rise or fall of market exchange rate. The change of market exchange rate depends on the change of supply and demand in foreign exchange market, which is the passive adaptation of exchange rate to the relationship between supply and demand of foreign exchange.
Exchange rate adjustment is mainly the active adjustment of the legal exchange rate made by the financial management authorities for a certain policy goal or according to the actual change of the local currency. At the same time, exchange rate adjustment is closely related to market exchange rate changes.
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