Generally speaking, the balance of payments deficit is also called the balance of payments deficit, which usually means that a country's expenditure on the balance of payments is greater than its income. The balance of payments deficit will lead to the decrease of foreign exchange supply and the increase of domestic foreign exchange market demand, which will make the foreign exchange rate rise and the local currency exchange rate fall. If the government takes measures to intervene, sell foreign exchange and buy local currency, the government does not have enough foreign exchange reserves, which will further lead to the depreciation of the local currency.

legal ground

Article 12 of the Regulations of People's Republic of China (PRC) on Foreign Exchange Control shall have a true and lawful trading basis. Financial institutions engaged in the settlement and sale of foreign exchange shall, in accordance with the provisions of the foreign exchange administration department of the State Council, conduct a reasonable examination of the authenticity of transaction documents and their consistency with foreign exchange receipts and payments.

The foreign exchange administration authorities have the right to supervise and inspect the matters specified in the preceding paragraph.