Exchange rate changes have a direct regulatory effect on a country's import and export trade. Under certain conditions, the devaluation of the local currency, that is, lowering the exchange rate, will promote exports and restrict imports; On the other hand, the appreciation of the local currency, that is, the rise of the exchange rate, plays a role in restricting exports and increasing imports.
Extended data:
Representation of exchange rate
1, local currency exchange rate
It is expressed by the amount of foreign currency that can be converted by the unit's local currency, which is called the local currency exchange rate. It is called RMB exchange rate in China, that is, the RMB price expressed in foreign currency, and its formula is 100 @= X X foreign currency.
When other factors remain unchanged, the RMB per unit amount can be exchanged for more foreign currencies, which means that the RMB exchange rate rises, the RMB appreciates relative to a foreign currency, the foreign currency depreciates, and the foreign exchange rate falls, which is beneficial to China's imports but not to exports;
On the other hand, if the unit amount of RMB can be exchanged for a small amount of foreign currency, it means that the RMB exchange rate declines and the RMB depreciates relative to a foreign currency, while the foreign currency appreciates and the foreign exchange rate rises, which is beneficial to China's exports but not to imports.
2. Foreign exchange rate
It is expressed by the amount of domestic currency that can be converted from foreign currency in a unit quantity, which is called foreign exchange rate. China usually adopts 100 foreign currency as the standard and converts it into a certain amount of RMB, that is, the price of a foreign currency is expressed in RMB, and its formula is 100 foreign currency = X.
When 100 unit of foreign currency can be exchanged for more RMB, the foreign exchange rate will rise, the foreign currency will appreciate relative to RMB, and the RMB will depreciate, that is, the price of foreign currency expressed in RMB will rise, which is beneficial to China's exports but not to imports.
On the other hand, it shows that the decline of foreign exchange rate, the depreciation of foreign currency against RMB and the appreciation of RMB are beneficial to China's imports and unfavorable to its exports.
To sum up, RMB depreciation, foreign currency appreciation, RMB exchange rate decline, foreign exchange rate rise; On the other hand, if RMB appreciates and foreign currency depreciates, the RMB exchange rate will rise and the foreign exchange rate will fall accordingly.
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