First, the central bank and the government set the initial exchange value of money according to their own needs, and they will decide the price of money according to their own conditions.

Case: On July 2 1 2005, the Bank of China announced that it would cancel the exchange rate formation mechanism of RMB pegged to the US dollar and adopt a managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies. On that day, the RMB rose from 8.2765 to 8. 1 1, with an appreciation rate of 2. 1%.

Second, the central bank and the government will also control the exchange rate of the currency in the market according to their own needs and economic conditions, and even directly intervene in the market to stabilize the exchange rate when necessary.

Case: In May 20 12, the Bank of Japan damaged Japan's export economy due to the continuous appreciation of the yen. The Bank of Japan continuously intervened in the trend of the yen, buying dollars in large quantities and selling yen to prevent the yen from appreciating. However, the yen exchange rate continued to rise after a short depreciation, ignoring the intervention of the Bank of Japan.

Third, the central bank affects the value of domestic currency and assets by adjusting the benchmark interest rate of money deposits and loans, thus affecting the price of domestic currency.

Case: 2065438+June 9, 2006, the Bank of Korea unexpectedly announced that the policy interest rate would be lowered from 1.50% to a historical low of 1.25%, after which the market expected interest rate remained unchanged at 1.50%. After the announcement of the resolution, USD/won rose sharply, hitting an intraday high of 1 159.45. The Bank of Korea influences the won exchange rate by lowering interest rates, thus stimulating exports.