What we should pay more attention to may be the reason for the rise and fall of the RMB exchange rate.
1. In the short term, supply and demand are important factors that determine the rise and fall of RMB exchange rate, just like the rise and fall of stocks. As the demand for RMB rises, the exchange rate of RMB will rise, and vice versa.
2. Balance of payments. Generally speaking, if a country has a surplus, its currency exchange rate will rise. Since China's reform and opening up, the foreign trade surplus has also led to the appreciation of the RMB against the US dollar.
3. Major events. If a major event occurs in a country, it will also have a major impact on the exchange rate in the short term. For example, the RMB joined the SDR. Recently, due to the gradual reduction of government intervention in the foreign exchange market, the RMB exchange rate fell below 6.70. For example, Britain withdrew from the European Union, resulting in the pound falling to a low of 3 1 year against the US dollar.
4. Economic fundamentals: the exchange rate of a country's currency is high or low, and economic strength is fundamental. The reason why the dollar has become its world currency depends on its strong economic strength. However, whenever a currency is recognized by the world, its economic strength must be strong, such as the United States, the European Union and Japan.