Local currency: Local currency refers to the legal tender of a country or region, and no other currency can circulate in this country except legal tender. For example, the only legal tender in Chinese mainland is RMB, so we also call RMB local currency at this time, but this concept is mostly used in the foreign exchange market. Everything except local currency is collectively called foreign currency.
The detailed explanation is: when the exchange rate falls, does the local currency appreciate or depreciate? It depends on whether you use direct quotation method or indirect pricing method. First of all, we should know that if the exchange rate of a currency rises, then the currency will appreciate.
Then we will look at the exchange rate in the direct quotation. Direct quotation refers to the price of foreign currency expressed in local currency, with foreign currency on the left of the equal sign and local currency on the right of the equal sign. The direct quotation is based on foreign currency, and the figure on the right refers to the exchange rate of the benchmark currency, that is, the exchange rate of foreign currency. For example, if the exchange rate rises, a unit of foreign currency can buy more local currency, while the foreign currency appreciates and the local currency depreciates.
Indirect pricing method refers to the price of domestic currency expressed in foreign currency, with local currency on the left and foreign currency on the right. The indirect pricing method is based on the local currency, and the right figure refers to the exchange rate of the benchmark currency, that is, the exchange rate of the local currency. For example, if the exchange rate rises, a unit's local currency can buy more foreign currency, while the local currency appreciates and the foreign currency depreciates.
We judge whether the currency appreciates or depreciates according to the change of exchange rate. We need to know which pricing method can be used to say whether the exchange rate is rising or falling, whether a currency is appreciating or depreciating, or whether a currency is rising or appreciating.
The simple summary is:
"Exchange rate" means the foreign exchange rate, which refers to the exchange rate of direct quotation, that is, 1 USD = 6.69 RMB. Except for the United States and Britain, direct quotation is basically used in the world. It can be understood as price, that is, how much a unit of foreign currency (local currency) is, when the exchange rate rises = the local currency depreciates.
If currency is added before "exchange rate", it is the price of currency. For example, the decline of local currency exchange rate and domestic exchange rate means the depreciation of local currency, and the decline of RMB exchange rate means the depreciation of RMB. In addition, sometimes the book will say "devaluation of local currency exchange rate", which means devaluation of local currency.