Appreciation (revaluation) and depreciation (devaluation)
It is two forms of exchange rate changes under the fixed exchange rate system.
Under this system, the government sets the value of money by the legal gold content, which is the so-called legal parity. Value-added means that the government raises the gold content of its own currency and lowers the foreign exchange rate through decrees. So it is also called legal appreciation; Devaluation means that the government reduces the gold content of its own currency and increases the foreign exchange rate through decrees, so it is also called legal devaluation.
Up (appreciation) and down (depreciation)
It is two forms of exchange rate change under the floating exchange rate system, in which the currency exchange rate changes with the change of supply and demand.
When the supply of foreign exchange exceeds the demand, its exchange rate will rise from bottom to top, which is called floating, that is, the appreciation of the country's currency.
When the supply of foreign exchange exceeds the demand, its exchange rate will decrease from top to bottom, which means that the country's currency depreciates. If China's currency continues to appreciate, it will affect the exchange rate fluctuation.
Extended data:
influencing factor
(1) balance of payments. Under the indirect pricing method: when a country's foreign current account balance is in surplus, the supply of foreign exchange (currency) exceeds demand in the foreign exchange market, so the local currency exchange rate rises and the foreign currency exchange rate falls;
On the other hand, when a country's international expenditure exceeds its income, it will have a balance of payments deficit, which means that the supply of foreign exchange (currency) is less than the demand of the foreign exchange market, so the exchange rate of its own currency will fall and the exchange rate of foreign currency will rise.
(2) the difference of inflation rate. When inflation occurs in a country, the cost of its commodities will increase, and the price of export commodities denominated in foreign currency will inevitably rise, thus weakening the competitiveness of this commodity in the international market, leading to a decrease in exports, while improving the competitiveness of foreign commodities in the domestic market, leading to an increase in imports, thus changing the current account balance.
In addition, the difference of inflation rate will also affect the income and expenditure of capital and financial accounts by affecting people's expectations of exchange rate. On the contrary, countries with low relative inflation rates tend to appreciate their currency exchange rates.
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