The Fed's interest rate hike means that the Federal Reserve Management Committee decided to adjust monetary policy and raise the federal funds rate after the interest rate meeting in Washington.

Simply put, raising interest rates is a tight monetary policy. The Federal Reserve responded to the current economic situation by raising interest rates. Generally, raising interest rates can increase bank interest, thus reducing the money supply, and the dollar will appreciate. In addition, the increase in interest rates will have an impact on the economy. For example, after the appreciation of the dollar, the price of gold will fall, and everyone is more willing to hold the dollar; The currencies of other countries will depreciate and so on.

What's the impact on us?

1 RMB will face the risk of short-term depreciation.

The announcement of interest rate increase by the Federal Reserve also means that the interest rate of the US dollar will rise. First of all, for Americans, interest rates have risen, and they naturally prefer to keep their money in the bank. Secondly, the increase in the interest rate of the US dollar means that the expected rate of return on holding US dollar assets will be higher than other currencies, so people are more willing to hold US dollar assets.

If there is more demand and less supply, the dollar will naturally become a hot commodity, so the dollar will appreciate at this time. The dollar can be exchanged for more RMB, and the appreciation of the dollar also means that the RMB will depreciate in the short term.

2 domestic capital outflows, stock market fluctuations

On the one hand, if the US dollar raises interest rates, the spread between China and the US foreign exchange market will narrow, which will make those funds that originally wanted to arbitrage in China flow out. On the other hand, the interest rate increase mentioned just now will make people feel that the expected return of the US dollar is higher, so domestic capital will also flow into the United States in large quantities, and the region will face a wave of adjustment or decline.

If the Federal Reserve raises interest rates and China continues to maintain its current monetary policy, it will cause more serious capital outflow. In order to prevent this, many times when the United States raises interest rates, we have no choice but to follow suit.

3. Affect China's commodity exports.

If the US dollar raises interest rates, American consumers' demand for China goods will drop. Except for the United States, the cost of goods imported by other countries will increase, which is very unfavorable to China's exports. In addition, due to the appreciation of the US dollar, the international commodity prices denominated in US dollars will fall.

For example, with the decline of product prices, the profits of resource industries such as coal, which are exported in large quantities, will decline. The reason why the Federal Reserve entered the interest rate hike cycle is that the stock prices of many resources are not good, which is good for enterprises that consume bulk commodities.

4 domestic enterprises financing costs increase

In order to solve the problem of working capital, many enterprises in China need to raise a lot of funds from abroad. Most financing is denominated in dollars.

On the one hand, the cost of dollar borrowing will rise; On the other hand, you will pay more RMB when you repay the loan. This makes it more difficult for domestic enterprises to raise funds. So the Fed's interest rate hike will do more harm than good to China! ! !