2. Exchange rate and price From the perspective of imported consumer goods and raw materials, the decline in exchange rate will cause the domestic price of imported goods to rise. As for the impact on the overall price index, it depends on the proportion of imported goods and raw materials in the gross national product. On the other hand, if the local currency appreciates and other conditions remain unchanged, the price of imported goods may decrease, which can play a role in restraining the overall price level.
3. The conversion of exchange rate and capital outflow into short-term capital flow is often greatly influenced by exchange rate. When the local currency depreciates, domestic investors and foreign investors are unwilling to hold various financial assets denominated in local currency, and will convert them into foreign exchange, leading to capital outflow. At the same time, due to the continuous exchange of foreign exchange, the shortage of foreign exchange supply and demand will be aggravated, and the local currency exchange rate will be further lowered. On the other hand, when there is a trend of appreciation of local currency abroad, domestic investors and foreign investors try to hold various financial assets denominated in local currency, which will lead to capital inflows. At the same time, since foreign exchange has been converted into local currency, the oversupply of foreign exchange will further promote the exchange rate of local currency.
The influence of exchange rate on import and export: the decline of exchange rate can promote exports and curb imports. (Foreign exchange rate rises, local currency rate falls)
The influence of exchange rate on prices: the decline of exchange rate will lead to an increase in the overall domestic price level; The increase of exchange rate has played a role in curbing inflation.
Influence of exchange rate on capital flow: Exchange rate has little effect on long-term capital flow. In the short term, the exchange rate depreciates; Capital outflow; The appreciation of exchange rate is beneficial to capital inflow.
First, the impact on the balance of payments
(1) Impact on trade balance: After Marshall-Lerner conditions are met, a country's currency depreciation can promote exports and curb imports, thus improving the balance of payments.
(2) Impact on service trade balance: Devaluation is beneficial to improve the project.
(3) Impact on capital account balance: When the actual market exchange rate is not equal to the expected market exchange rate, international capital flows.
Second, the impact on the domestic economy.
(1) Impact on domestic price level: The depreciation of local currency leads to the price increase of imported goods on the one hand, and export goods on the other.
(2) Impact on national income, employment and resource allocation: devaluation of the local currency will help export restrict imports, and the restricted production resources will shift to export industries and import substitution industries, increasing national income and employment, thus changing the domestic production structure.
(3) that influence on microeconomic activity.
Third, the impact on the world economy.
Exchange rate changes are regarded as a means of international competition and expansion: currency depreciation can achieve the purpose of expanding foreign sales; Currency overvaluation can achieve the purpose of foreign plunder; Therefore, frequent exchange rate fluctuations will increase the contradiction between developed and developing countries.
First, the impact on the balance of payments
(1) Impact on trade balance: Impact of exchange rate on import and export: The decline of exchange rate can promote exports and restrain imports. (Foreign exchange rate rises, local currency rate falls)
2. The influence of exchange rate on prices: the decline of exchange rate will lead to an increase in the overall domestic price level; The increase of exchange rate has played a role in curbing inflation.
3. Impact of exchange rate on capital flow: Exchange rate has little impact on long-term capital flow. In the short term, the exchange rate depreciates; Capital outflow; The appreciation of exchange rate is beneficial to capital inflow.
(B) the impact on non-trade balance of payments
1, the impact on the intangible trade balance: a country's currency exchange rate falls, the purchasing power of foreign currency increases, but goods and services are cheap. The decline in the purchasing power of local currency and the increase in the prices of foreign goods and services are conducive to improving the balance of payments of tourism and other services in the country.
2. Impact on unilateral transfer income: If a country's currency exchange rate falls, if domestic prices remain unchanged or rise relatively slowly, it will have an adverse impact on the country's unilateral transfer income and expenditure.
3. Impact on capital inflow and outflow: Exchange rate has little impact on long-term capital flow. In the short term, the exchange rate depreciates; Capital outflow; The appreciation of exchange rate is beneficial to capital inflow.
4. Impact on official reserves: ① The change of domestic currency directly affects the increase and decrease of domestic foreign exchange reserves through capital transfer and the increase and decrease of import trade volume. (2) The exchange rate of reserve currency falls, which makes the real value of foreign exchange reserves of countries that maintain reserve currency suffer losses. Reserve countries have reduced their debt burden due to currency devaluation and benefited from it.
Second, the impact on the domestic economy.
(A) the impact on domestic prices
1, the exchange rate changes through the price changes of imported goods.
2. After the exchange rate changes, if the foreign exchange rate depreciates, the supply of goods in the domestic market tends to be tight and the price tends to rise, because the dividend is limited, which is beneficial to exports and relatively unfavorable to imports.
3. After the exchange rate changes, if the local currency depreciates, exports increase, imports decrease, trade deficit decreases, and surplus increases, it will inevitably increase the amount of money in the country and push up prices when other factors remain unchanged.
4. For currency exchange countries, if the local currency tends to appreciate against foreign currency, there will be a large amount of foreign capital flowing in to seek spreads, and if necessary control measures are not taken, the price of the country will also rise.
(2) Impact on national income, employment and resource allocation: devaluation of the local currency will help export restrict imports, and the restricted production resources will shift to export industries and import substitution industries, increasing national income and employment, thus changing the domestic production structure.
Third, the impact on the international economy.
1, the unstable exchange rate has deepened the competition among countries for the sales market and affected the normal development of international trade.
2. Affect the status and role of some reserve currencies and promote the diversification of international reserve currencies.
3. Intensify speculation and turbulence in the international financial market, and at the same time promote the continuous innovation of international financial business.
Fourth, the impact on international financial markets.
1, the exchange rate changes of some major countries directly affect the exchange rate changes of other currencies in the international foreign exchange market, making international finance turbulent.
2. Due to frequent exchange rate changes, foreign exchange risks have increased and foreign exchange speculation has intensified, further aggravating the turmoil in the international financial market.
3. The fluctuation of exchange rate, especially the exchange rate of major reserve currencies, affects the fund lending activities in the international financial market.
References:
1. foreign exchange rate
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1. Foreign exchange rate:
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