Exchange rate can be understood as price. When the exchange rate rises, the price will rise.
There are two main ways to express the exchange rate. One is how much local currency the unit foreign currency is converted into, which is a direct quotation, such as 1 USD =6 RMB in China. In this way, the exchange rate rises, firstly, the unit foreign currency is converted into more local currency, that is, the local currency has depreciated (1 USD =8 RMB), and secondly, it is expressed by how many foreign currencies the unit local currency has been converted into.
On the contrary, the exchange rate decreases and the local currency appreciates.
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 exchange rate of local currency refers to the price of local currency. In Chinese mainland, the local currency exchange rate is RMB exchange rate; In the United States, the local currency exchange rate is the dollar price. The exchange rate of foreign exchange is a general concept, which means that one currency is used to express the price of another currency. It can be understood that the word price has different meanings under different pricing methods. Under direct quotation (that is, the price of foreign currency is expressed in local currency, which is the pricing method of most countries in the world, and China is such a representative), the rise of exchange rate means the depreciation of local currency.
Currency swap agreement
The pilot projects of RMB settlement for cross-border trade in Shanghai and Guangzhou, Shenzhen, Zhuhai and Dongguan in Guangdong Province marked the beginning of RMB settlement from border trade to general international trade. Experts believe that promoting RMB cross-border trade settlement is a natural result of meeting market demand, which is conducive to stabilizing trade demand in the context of the international financial crisis and promoting the implementation of a series of local currency swap agreements.
In June 5438+February, 2008, the State Council decided to launch a pilot project of RMB settlement of goods trade between Guangdong and the Yangtze River Delta, Hong Kong and Macao, Guangxi and Yunnan and ASEAN. This time, Shanghai and four cities in Guangdong Province became the first pilot cities. The person in charge of the central bank recently pointed out that the realization of RMB trade settlement is a natural result of adapting to the situation under the background of increasing demand in the RMB settlement market.
Since the outbreak of the international financial crisis, the exchange rates of the US dollar and the euro, the most important settlement currencies in international trade, have fluctuated violently. At the same time, the international financial crisis and the world economic slowdown have had a great impact on trade financing. Large fluctuations in exchange rates and shrinking trade financing have adversely affected trade demand.
In the violent fluctuation of the exchange rate between the US dollar and the Euro, enterprises in China and trading partner countries generally hope to use the relatively stable RMB for pricing and settlement, so as to avoid the exchange rate risk of using the US dollar and the Euro for settlement. Therefore, the implementation of RMB settlement can make import and export enterprises achieve a win-win situation and help stabilize trade demand.
Since the international financial crisis, the local currency swap agreements signed by the People's Bank of China and other central banks or monetary authorities have provided a source of funds for expanding the use of RMB settlement. At the same time, RMB settlement has also built a platform for swap agreements, enabling trade and promoting currency swaps.
The central bank said that signing a series of local currency swap agreements with relevant central banks or monetary authorities is not only to deal with short-term liquidity problems, but also reflects the innovation of currency swap, that is, to support the use of swap funds for trade financing. Its operating mechanism is that the central bank injects the other party's currency into the domestic financial system through swap, so that domestic commercial institutions can borrow the other party's currency to pay for the other party's imported goods.
At present, the global economic and trade growth is weak, the fluctuation of foreign exchange market is intensified, and trade financing is shrinking. The signing of a series of swap agreements totaling 650 billion yuan has provided a source of funds for expanding the use of RMB settlement. The implementation of the pilot project of RMB participation in international trade settlement has enabled the swap currency to enter commercial banks and enterprises from the central bank, providing a return channel for the other party's currency obtained by the relevant central banks and monetary authorities through swap agreements, which is conducive to promoting currency swap.
The implementation of RMB settlement pilot needs the coordination of many departments. In addition to the planning led by the People's Bank of China, it is also necessary for customs, taxation and other departments to promote supporting policies such as RMB declaration and export tax rebate. Regulators need to verify the authenticity of trade to ensure that RMB settlement is based on real trade.
For banks, it is necessary to provide good settlement services for cross-border trade, and enterprises need to choose the currency for pricing and settlement according to the actual trade situation. At the same time, whether the governments of trading partners intend to use RMB settlement in bilateral trade is also a factor that affects the promotion of RMB settlement.