The logical analysis is as follows: the total demand is greater than the total supply-the price of domestic commodities rises-the competitiveness of domestic commodities in the international market declines-domestic exports decrease-the demand for local currency in the foreign exchange market decreases, and the supply of foreign currency increases-the local currency depreciates and the foreign currency appreciates.

You can also learn from law of one price, law of one price (the.

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Price) is the absolute purchasing power parity theory, which can be simply expressed as: the same goods are sold at the same price no matter where they are sold. When the total domestic demand is greater than the total supply, prices rise, and the same commodity needs to be purchased in more domestic currency, while the foreign demand remains unchanged, the commodity price remains unchanged, and the required foreign currency remains unchanged, so the local currency depreciates.