The concept of foreign exchange has a double meaning, that is, there are dynamic and static points. The dynamic concept of foreign exchange refers to a specialized business activity of converting one country's currency into another country's currency to pay off international creditor's rights and debts. It's short for foreign exchange. The static concept of foreign exchange refers to the means of payment expressed in foreign currency that can be used for international settlement. This means of payment includes credit instruments and securities expressed in foreign currency, such as bank deposits, commercial bills, bank drafts, bank checks, foreign government treasury bills and their long-term and short-term securities. The International Monetary Fund explained: "Foreign exchange is the creditor's rights held by the monetary management authorities (central bank, monetary management institutions, foreign exchange stabilization fund and the Ministry of Finance) in the form of bank deposits, Treasury bills and long short-term government bonds. Can be used when there is a deficit in the balance of payments. "
foreign exchange rate
According to the Regulations on Foreign Exchange Management promulgated by China in June 1997, foreign exchange refers to the following means of payment and assets expressed in foreign currency that can be used for international settlement:
(1) Foreign currencies, including banknotes and coins;
(2) Foreign currency payment vouchers, including bills, bank deposit vouchers, corporate bonds, stocks, etc. ; (3) Foreign currency securities, including government bonds, corporate bonds and stocks;
(4) Special Drawing Rights, European Monetary Unit (Euro);
5] Other foreign exchange assets.
What people usually call foreign exchange is generally in its static sense. It is a foreign currency or a means of payment expressed in foreign currency, which can be used for international settlement. Exchange rate, also known as exchange rate, refers to the price expressed by one country's currency in another country's currency, or the price comparison between two currencies. In the foreign exchange market, the exchange rate is displayed in five digits, such as: euro EUR0.9705, yen JPY 1 19.95, pound GBP 1.5237, Swiss franc CHF 1.5003. The minimum change unit of the exchange rate is one point, that is, the last one. For example, EUR0.000 1, JPY0.0 1, GBP0.000 1, CHF0.000 1. According to international practice, three English letters are usually used to indicate the name of currency, and the English after the above Chinese name is the English code of currency.
The exchange rate is also called "foreign exchange market or exchange rate". The ratio of one country's currency to another is the price of another currency expressed in one currency. Because of the different names and values of currencies in the world, one country's currency should set an exchange rate for other countries' currencies, that is, the exchange rate.
Exchange rate is the most important adjusting lever in international trade. Because the cost of goods produced by a country is calculated according to its currency, the cost of goods must be related to the exchange rate in order to compete in the international market. The exchange rate will directly affect the cost and price of the commodity in the international market and the international competitiveness of the commodity.
For example, a commodity with a value of 100 RMB is priced at 12. 12 USD in the international market if the exchange rate of USD against RMB is 8.25. If the exchange rate of the US dollar rises to 8.50, which means that the US dollar appreciates and the RMB depreciates, then the price of this commodity in the international market is 1 1.76 US dollars. If the price of a commodity is reduced and its competitiveness is enhanced, it will certainly sell well, thus stimulating the export of the commodity. On the other hand, if the exchange rate of the US dollar falls to 8.00, that is to say, the US dollar depreciates and the RMB appreciates, then the price of the commodity in the international market is 12.50. High-priced goods are definitely not easy to sell, which will definitely hit the export of this commodity. Similarly, the appreciation of the US dollar and the depreciation of the RMB will restrict the import of goods to China, and conversely, the depreciation of the US dollar and the appreciation of the RMB will greatly stimulate imports. Now you should understand why Japanese and Americans always clamor for RMB appreciation, which will greatly increase the cost of China's exports in the international market, hit the competitiveness of China's goods, and then stimulate China to import their goods in large quantities. At the same time, you should also understand why China's insistence on not devaluing the RMB was a great contribution to the international community during the Asian financial crisis. If the RMB depreciates, the financial crisis in other countries will be more serious!
It is precisely because exchange rate fluctuations will bring such a wide range of fluctuations to import and export trade that many countries and regions have implemented relatively stable currency exchange rate policies. The rapid and steady growth of Chinese mainland's import and export volume is largely due to the stability of RMB exchange rate.