Advantages and disadvantages of RMB appreciation and depreciation

Is RMB appreciation a good thing or a bad thing? So what are the advantages and disadvantages of devaluation? Below I will make an analysis of the advantages and disadvantages of RMB appreciation and depreciation. What is the appreciation of RMB

In the most popular words, the appreciation of RMB means that the purchasing power of RMB increases, and prices are prone to inflation as it rises. That is to say, before the appreciation of RMB, you can exchange one dollar for 8 yuan RMB, but now you can only exchange it for 6.12 yuan after the appreciation. That is to say, you used to need 8 yuan RMB to buy one-dollar things, but now you need 6.12 yuan to buy one-dollar things, so the money in people's pockets will be more valuable, and it will be cheaper to travel abroad and buy imported luxury goods.

because the appreciation of RMB will inhibit China's exports.

and our main export target is the United States. In recent years, the United States has a trade deficit. Appreciation will slow this down. Relatively speaking, the rise of China's currency value will stimulate foreign imports to China.

After the appreciation of RMB, from the macro-economic point of view, the cost of direct investment in China will increase, foreign investors will reduce their investment in China, foreign tourists will reduce their travel and consumption in China, and at the same time, a large number of imported goods will flood into the domestic market, which will cause some domestic enterprises to readjust and many people may lose their jobs. What is RMB depreciation

RMB depreciation refers to the rate at which one country's currency is exchanged for another's currency, that is, the exchange rate. Many people confuse it with what we usually call whether money is "valuable". Both of them are indicators to measure the purchasing power of a country's currency, but the former is aimed at the purchasing power of international trade, while the latter actually measures the inflation level of a country, which is aimed at the purchasing power of domestic goods. First of all, you have to understand this concept. The appreciation of RMB means that the exchange rate of RMB against other currencies has increased.

For example, the original exchange rate of RMB for one dollar in 8 yuan is more than RMB, but now the exchange rate of RMB for one dollar in 6 yuan is more than RMB, which means the appreciation of RMB, and the depreciation of RMB means just the opposite. In addition, at present, the exchange rate generally adopts indirect pricing method, that is, how many units of local currency can be exchanged for one unit of foreign currency, and only the pound adopts direct quotations, that is, how many units of foreign currency can be exchanged for one unit of pound. Of course, the RMB exchange rate adopts the indirect pricing method. It should be noted that simply saying "exchange rate appreciation" means whether the local currency appreciates or depreciates depends on the pricing method adopted. If it is specified that a certain currency appreciates (such as RMB), it obviously means that the ratio of the currency to foreign currency has increased. The impact of RMB appreciation is

positive

1, beneficial to China's import

2, the cost of raw material import-dependent manufacturers is reduced

3, the ability of domestic enterprises to invest abroad is enhanced

4, the profit of foreign-invested enterprises in China is increased

5, and it is beneficial to talents to study and train abroad

6. The pressure of debt service is reduced

7, the asset sale in China is more cost-effective

8, the international status of China's GDP is improved

9, the national tax revenue is increased

1, the international purchasing power of China people is enhanced

1, the RMB is not freely convertible under the capital account, that is to say, the mechanism for determining the exchange rate is not the market. There is no point in changing

2. The appreciation of RMB will bring greater pressure to deflation in China

3. The appreciation of RMB exchange rate will reduce the attraction to foreign investment, reduce foreign direct investment in China

4. It will do great harm to China's foreign trade exports

5. The appreciation of RMB exchange rate will reduce the profit rate of China enterprises. Increasing employment pressure

6. The fiscal deficit will increase due to the appreciation of RMB exchange rate, and at the same time it will affect the stability of monetary policy. Analysis of the main advantages and disadvantages

First, the appreciation of RMB is not conducive to exports. After the appreciation of RMB, foreign importers will have to pay millions of dollars or more to buy goods of the same quality and quantity. If the appreciation rate is not too large, the competitive advantage of China's exported goods will not be greatly affected because of the competitiveness of China's labor costs; Its impact on trade only has the psychological effect on people when the media hype, that is to say, the price fluctuation of China's export products in other countries due to currency appreciation and the impact on the interests of traders are minimal, but people with ulterior motives have taken this opportunity to create a psychological effect that is unfavorable to China internationally, that is, people may think that the price of products from China has gone up without specific analysis, and businessmen will think that they will not make much money by importing products from China. Thus having a real negative impact on China's exports. In terms of its nature, it is similar to a successful rumor that slandered China. In other words, letting the RMB appreciate slightly will do harm to China's exports.

second: RMB appreciation is not conducive to the introduction of foreign capital; What people could have done in China for 1 million pounds, after the appreciation of the RMB, may need to increase the investment by millions of pounds. This means that foreign investors have to pay millions of pounds out of thin air without buying anything before they come in, and investors will definitely get a good deal.

Third, the appreciation of RMB will make the investment that originally needed 1 billion dollars to be completed abroad, and it will be completed with millions or even tens of millions of dollars less after appreciation, so it will inevitably accelerate the capital outflow. We must realize that the current capital outflow is not good for our country.

fourth: RMB appreciation will lead to an increase in imports, which may lead to a trade deficit and affect the competitiveness of domestic enterprises. For example, before the appreciation of RMB, it would cost US$ 6 billion to import 12 civil aviation aircraft, then it may only cost US$ 5.9 billion after the appreciation of RMB.

Fifth, the appreciation of RMB will lead to the investment of international financial capital in RMB, that is, RMB will become the purchase object of people's wealth to preserve and appreciate, that is to say, RMB will have a "golden effect" internationally.

Sixthly, the appreciation of RMB is conducive to the repayment of foreign debts. After the appreciation of RMB, we may have to pay hundreds of millions of dollars less for the foreign debts that we originally needed to repay.

Seventh, the appreciation of RMB is conducive to the process of RMB becoming an international currency.

Based on the above analysis, it is not good for me to appreciate the RMB unilaterally. First, China's economy is dependent on exports, which is very bad for China. Second, the domestic employment pressure is great, and the capital outflow is very unfavorable; Third, the competitiveness of Chinese enterprises depends entirely on low labor costs, rather than technology, brand, capital strength, entrepreneurial ability, etc., and the appreciation of RMB will greatly increase imports, which will eventually greatly damage the competitiveness of domestic enterprises; Fourth, at present, the strength of RMB is far from becoming an international currency, that is to say, it is impossible to compare with the US dollar, the euro and the Japanese yen in the eyes of the people of the world. This will never make RMB become another important international currency at present. Fifth, the security of China's fiscal deficit and financial bad debt structure has not passed the major economic risk test, and there is still a problem of not being afraid of 1 thousand, but being afraid of one thousand. Sixth, the security of the surrounding land indicates that it is impossible for us to completely ignore the huge impact and destructive power that war factors will have on China's economy one day. Seventh, China's current economic aggregate has not affected the world economy to the extent that some people think. Even if the currency is adjusted, it will not be enough to benefit the economies of all countries in the world. On the contrary, it will immediately hurt itself. Eighth, many supporting measures for domestic economic reform have not really been completed, which may lead to a "raw meal". If the external economic environment is unfavorable again due to the appreciation of RMB, China's economic growth will be greatly reduced.

RMB appreciation is conducive to the rise of real estate prices: the formation of the bubble in the real estate market is by no means the result of simply meeting the independent demand. Among them, excessive liquidity, rising prices, inflationary pressure, negative interest rates and RMB appreciation lead to speculative demand for foreign capital, which may be the main factors of high real estate prices.

RMB depreciation is conducive to the decline of real estate prices: if RMB continues to depreciate, it will undoubtedly make the decline of real estate prices worse. If this happens, the asset price bubble in China will be burst, and the property market will undoubtedly be the first to bear the brunt, and the stock market will not escape from the disaster. Originally, China's prosperous economy supported high housing prices. Because people are optimistic about the economy, they will also be optimistic about their own income growth expectations. They will take advantage of the low interest rate in previous years to invest heavily in the real estate industry in China. However, at present, China's economy is not only slowing down, but also the shadow banking and local government debt problems make the financial crisis imminent. Therefore, let alone that the pace of foreign capital flowing out of China will expand, and domestic real estate tycoons will gradually move a lot of assets overseas to enjoy the feast of lower cost and higher return of overseas financing. In this case, China's real estate industry is about to burst this year.

the inflow of foreign capital is the basis of asset prosperity and asset revaluation in China in the past few years. At present, the capital market is extremely depressed and the real estate is in jeopardy. If the RMB depreciates sharply, it will lead to a large-scale outflow of funds, and the consequences will be unimaginable.

Why does RMB depreciate? 1. The decline in economic growth is the main reason for RMB depreciation. 2. Foreign investment declined and international hot money flowed out. 3. The global economic recovery is difficult and repeated. The developed economies are showing signs of strengthening, the economies of emerging countries are experiencing difficulties and a sharp decline, and the currencies of emerging countries are generally weakening. 4. The trade surplus narrowed, resulting in depreciation pressure.

Analysis of advantages and disadvantages of RMB depreciation: In 214, the central bank will gradually improve the RMB exchange rate formation mechanism and expand the floating range of the exchange rate in an orderly manner. The recent continuous depreciation of the RMB against the US dollar only reflects the intention of the Bank of China to increase the two-way fluctuation of the exchange rate, in preparation for expanding the floating range of the exchange rate. A measure to reduce the scale of circulating cash in China's economy. Controlling the inflow of hot money and trying to reverse the trend of steady unilateral appreciation of the renminbi led to the central bank kidnapped by real estate, trying to break through. Promote bilateral fluctuation of RMB.

The positive spread between local currency and foreign currency and the low fluctuation of exchange rate are the basic reasons for the formation of arbitrage trading, and the way to remove it is to enhance the elasticity of two-way fluctuation of exchange rate and reduce speculation. In the long run, China's fundamental factors and the actual purchasing power of RMB are the decisive factors for the RMB exchange rate, because China's economic growth rate is unique in the world. In the long run, the RMB still has a strong trend. However, in the process of the Fed's gradual withdrawal from the quantitative easing policy, the bilateral fluctuation of RMB may increase. This kind of market sentiment, which neither dares to continue to make more RMB substantially, nor bears RMB substantially, is the favorable condition for perfecting the formation mechanism of RMB exchange rate marketization.

As far as the depreciation of RMB itself is concerned, it will lead to the decrease of domestic assets value, which may adversely affect real estate. Conducive to economic transformation. The devaluation of RMB will increase exports and competitiveness, which will help alleviate the deflation expectation caused by insufficient demand in China. In addition, the devaluation of RMB is the sharp convergence of international speculative capital, that is, hot money arbitrage, the resale of assets such as US dollars after selling RMB and related assets, the decline of domestic investment, the decrease of investment projects that used to need a lot of money, the decrease of places where money was used, the decrease of loans, the increase of liquidity in the market, the decrease of interest rates and the decrease of financing costs in the real economy. Reduced investment can improve overcapacity and reduce the increasing debt burden, and reduced capital demand will help increase domestic liquidity.

people who have seen the pros and cons of RMB appreciation and depreciation still see:

1. Will RMB continue to depreciate

2. What is the impact of RMB depreciation on insurance

3. Will RMB depreciate after joining SDR?