1, exchange rate (also known as foreign exchange rate, foreign exchange rate or foreign exchange market) The exchange rate between two currencies can also be regarded as the value of one country's currency against another. Exchange rate is also a financial means for a country to achieve its political goals. The exchange rate will change because of interest rates, inflation, national politics and national economies. The exchange rate is determined by the foreign exchange market. The foreign exchange market is open to different types of buyers and sellers to conduct extensive and continuous currency transactions (foreign exchange transactions are conducted 24 hours a day except weekends, that is, from 8: 15 GMT on Sunday to 22:00 GMT on Friday). Spot exchange rate refers to the current exchange rate, and forward exchange rate refers to the exchange rate quoted and traded on the same day, but paid on a specific date in the future). The fluctuation of a country's foreign exchange market will have an impact on import and export trade, economic structure and production layout. Exchange rate is the most important adjusting lever in international trade. A falling exchange rate can promote exports and curb imports.
2. Generally speaking, the depreciation of the local currency exchange rate, that is, the depreciation of the foreign ratio of the local currency, can promote exports and curb imports; If the exchange rate of local currency rises, that is, the ratio of local currency to the outside world rises, which is beneficial to imports and unfavorable to exports. From the perspective of imported consumer goods and raw materials, the decline of exchange rate will cause the domestic price of imported goods to rise. As for the impact on the overall price index, it depends on the proportion of imported goods and raw materials in the gross national product. On the other hand, other things being equal, the price of imported goods may fall, and its influence on the overall price index depends on the proportion of imported goods and raw materials in the gross national product.
3. Short-term capital flow is often greatly influenced by exchange rate. When the local currency depreciates, domestic investors and foreign investors are unwilling to hold various financial assets denominated in local currency, and will convert them into foreign exchange, leading to capital outflow. At the same time, due to the continuous exchange of foreign exchange, the demand for foreign exchange is in short supply, which will push the local currency exchange rate further down. On the other hand, when there is a trend of appreciation of local currency abroad, domestic investors and foreign investors try to hold various financial assets denominated in local currency, which will lead to capital inflows. At the same time, since foreign exchange has been converted into local currency, the oversupply of foreign exchange will further promote the exchange rate of local currency.