Follow-up: I understand this knowledge, but I still don't quite understand why the deficit will cause the exchange rate of the domestic currency to fall. Answer: Because … if a country has a deficit in its balance of payments, the demand for its currency will decrease, and the foreign exchange flowing into the country will decrease, then its exchange rate will fall and its currency will depreciate. Specifically, in the balance of payments, it is not only trade items but also capital items that have an impact on exchange rate changes. The trade balance deficit directly affects the decline of the currency exchange rate. For example, an important reason for the decline of the US dollar exchange rate is that the US trade deficit is getting bigger and bigger. However, due to China's huge trade surplus and good balance of payments, China's foreign exchange rate is on the rise. The deficit of capital account directly affects the decline of currency exchange rate. When a country has a large capital account deficit, and other items in the balance of payments are not enough to make up for it, then the balance of payments will have a deficit, which will lead to a decline in the foreign exchange rate of its own currency.