The exchange rate indicates that there are direct bids and indirect bids. Direct quotation is the unit foreign currency price expressed in local currency. Most countries in the world adopt direct quotation, China and direct quotation.
As far as the concept of exchange rate is concerned, one currency represents the price of another currency, which is just a number. For example, US$ 65,438 +0 =7 RMB, and 7 is the exchange rate, also called foreign exchange rate. When 7 becomes 8, the exchange rate rises. Under direct quotation, exchange rate rise = exchange rate depreciation = local currency depreciation.
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The devaluation of the currency has led to an increase in prices in China. However, under certain conditions, currency depreciation can stimulate production, reduce the price of domestic goods abroad, and help expand exports and reduce imports. Therefore, after the Second World War, many countries used it as a means to fight against the economic crisis and stimulate economic development.
Domestically, currency devaluation under the metal currency system refers to measures to reduce the legal metal content of domestic currency and its price to metals, thus reducing the value of domestic currency; Currency devaluation under the modern paper currency system refers to the decline in the value of paper currency (that is, currency inflation) when the number of paper currency in circulation exceeds the required currency demand.
Internationally, the value of money is manifested in the ability to exchange with foreign currency, which is embodied in the change of exchange rate. At this time, currency devaluation means that the ability of a unit's domestic currency to exchange foreign currency decreases, while the foreign exchange rate of its domestic currency decreases. For example, if US$ 65,438+000 is exchanged for 300 yuan RMB last year and 400 yuan RMB this year, the RMB will depreciate.
The devaluation of the currency has led to an increase in prices in China. However, under certain conditions, currency depreciation can stimulate production, reduce the price of domestic goods abroad, and help expand exports and reduce imports. Therefore, after the Second World War, many countries used it as a means to fight against the economic crisis and stimulate economic development.