The depreciation of a country's exchange rate will generally lead to an increase in the number of export commodities. Because the devaluation of the local currency means the decline of domestic commodity prices expressed in foreign currencies, thus improving the competitiveness of export commodities in foreign markets, attracting more consumers and leading to an increase in exports. However, influenced by other related factors, the impact of exchange rate depreciation on exports will be complicated.

The depreciation of exchange rate means that the price of foreign imported goods in local currency rises, which leads to the decline of their competitiveness, so the number of imports will decrease. However, similar to the export situation, there are many other factors involved in the process of exchange rate depreciation affecting import expenditure, so the impact of exchange rate depreciation on a country's import expenditure is sometimes uncertain.

Definition of exchange rate

Exchange rate (also known as foreign exchange rate, foreign exchange rate or foreign exchange market) The exchange rate between two currencies can also be regarded as the value of one country's currency against another. Exchange rate is also a financial means for a country to achieve its political goals. The exchange rate will change because of interest rates, inflation, national politics and national economies. The exchange rate is determined by the foreign exchange market. The foreign exchange market is open to different types of buyers and sellers to conduct extensive and continuous currency transactions (foreign exchange transactions are conducted 24 hours a day except weekends, that is, from 8: 15 GMT on Sunday to 22:00 GMT on Friday). Spot exchange rate refers to the current exchange rate, and forward exchange rate refers to the exchange rate quoted and traded on the same day, but paid on a specific date in the future).

The fluctuation of a country's foreign exchange market will have an impact on import and export trade, economic structure and production layout. Exchange rate is the most important adjusting lever in international trade. A falling exchange rate can promote exports and curb imports.

Exchange rate category

(1) According to the evolution of the international monetary system, there are fixed exchange rates and floating exchange rates.

① Fixed exchange rate. Refers to the exchange rate set and announced by the government, which can only float within a certain range.

② Floating exchange rate. Refers to the exchange rate determined by market supply and demand. Its fluctuation is basically free, and a country's money market has no obligation to maintain the exchange rate level in principle, but it can intervene when necessary.

(2) According to the method of setting exchange rate, there are basic exchange rate and arbitrage exchange rate.

① Basic exchange rate. When setting exchange rates, countries must choose a currency as the main comparison object, which is called the key currency. According to the comparison of the actual value of domestic currency and key currency, the exchange rate between domestic currency and key currency is calculated, which is the basic exchange rate. Generally speaking, the US dollar is the currency used more in international payment. All countries regard the US dollar as the main currency for setting exchange rates, and often regard the exchange rate against the US dollar as the basic exchange rate.

2 exchange rate arbitrage. It refers to the exchange rate calculated by countries according to the basic exchange rate against the US dollar, which directly reflects the value ratio between other currencies.