1, balance of payments
In investment and financial management, the balance of payments is the direct cause of a country's exchange rate changes. If a country has a surplus in its balance of payments, it will lead to the increase of foreign demand for its currency and the increase of foreign money supply, and the exchange rate of the surplus country will rise.
On the contrary, when a country's balance of payments is in deficit, its currency exchange rate will fall. For example, the trade deficit between the United States and the former West Germany caused the exchange rate of the US dollar against the West German mark to drop from 3.4390 in 1982 to 1.7685 in 1988, a decrease of 48.6%. Therefore, some economists still adhere to the theory that the exchange rate determines the balance of payments.
2. Economic growth rate
The difference of economic growth rate between the two countries often forms the basis of exchange rate changes, because it will affect the adjustment of foreign trade and foreign exchange market trading activities. Generally speaking, the acceleration of economic growth and the improvement of domestic demand will lead to more imports, thus causing downward pressure on the exchange rate of local currency.
Extended data:
Mark the price
(1) Direct quotation
The direct quotation method, also known as the price payable method, is to calculate how many units should be paid in the local currency based on a certain unit of foreign currency (1, 100, 10000,10000). It is equivalent to calculating how much local currency should be paid for purchasing a unit of foreign currency, so it is called the payable price method.
Most countries in the world, including China, currently adopt direct quotation. In the international foreign exchange market, Japanese yen, Swiss franc and Canadian dollar are all quoted directly, such as Japanese yen 1 19.05, that is, one dollar against 1 19.05 yen.
Under the direct quotation, if a unit's foreign currency conversion cost currency is more than the previous period, it means that the foreign currency value rises or the local currency value falls, which is called the foreign exchange rate rise; On the other hand, if you want to use less local currency than before, you can convert it into the same amount of foreign currency, that is to say, the decline of foreign currency value or the increase of local currency value is called the decline of foreign exchange rate, that is, the value of foreign currency is directly proportional to the rise and fall of exchange rate.
(2) indirect pricing method
Indirect pricing method is also called accounts receivable pricing method. It calculates the foreign currency receivable of several units in the domestic currency of a unit (such as 1 unit). In the international foreign exchange market, euro, pound and Australian dollar are all indirectly priced. For example, the euro is 0.9705, which means that 1 euro is 0.9705 USD.
In the indirect pricing method, the local currency amount remains unchanged, and the foreign currency amount changes with the relative change of the local currency value. If a certain amount of local currency can be converted into less foreign currency than the previous period, it means that the value of foreign currency rises and the value of local currency falls, that is, the exchange rate falls;
On the other hand, if a certain amount of local currency can be converted into more foreign currency than the previous period, it means that the value of foreign currency has decreased and the value of local currency has increased, that is, the exchange rate has increased, that is, the value of foreign currency is inversely proportional to the rise and fall of exchange rate. More information can be found on Fortune Global Gold Exchange.
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