1) Impact on the international economy 1.

Impact on international trade.

Theoretically speaking, after a country's currency appreciates, it will have the effect of "limiting exports and bonuses" on the country's imports and exports.

Therefore, for China, after the RMB appreciates, imports will tend to increase while exports will decrease, which is conducive to the balance of China's international payments and reduces the pressure on the rapidly growing foreign exchange reserves.

For the U.S. and European markets, since China’s products are exported to the U.S. and European markets, the appreciation of the RMB will reduce China’s exports to the above-mentioned countries and regions, which will be beneficial to the latter, especially the improvement of the U.S. current account deficit, thereby reducing the

Trade friction between China and Europe.

For Asian countries, since China's imports mainly come from Asian countries, especially Japan and ASEAN, the appreciation of the RMB will increase China's imports from rising countries and regions.

At the same time, the products exported to the US and European markets by Asian countries and China are highly substitutable. The appreciation of the RMB has led to an increase in the prices of products exported by China, which in turn has led to the expansion of exports of highly substitutable Asian countries to the US and Europe, thereby driving

Growth of various economies in Asia.

2.

Impact on international capital flows.

In October last year, international capital flows changed significantly, shifting from the crude oil futures market to Asia, betting heavily on the appreciation of the RMB.

The 2% appreciation of the RMB obviously does not meet the expectations of the market, especially hot money. Although it is unlikely that the RMB will appreciate again in the short term, subsequent appreciation of the RMB is almost an inevitable trend, which may trigger changes in the direction of international hot money flows.

Specifically, some funds may take profits and withdraw from China in the near future, but more funds may flow in later.

It is urgent to continue to implement capital controls, especially to increase supervision of capital inflows.

3.

Direct impact on the currency values ??of various countries.

On the day when the RMB appreciated, various currencies in Asia generally rose, with the Japanese yen rising by 2.4% against the US dollar, the Singapore dollar appreciating by 2.1%, and the US dollar against the Hong Kong dollar also hitting a new low of 7.7652 for the year.

More importantly, the Bank of Malaysia announced that it would abandon the fixed exchange rate system pegged to the US dollar and adopt a managed floating exchange rate system pegged to a basket of currencies.

This shows that the linkage between Asian currencies is getting stronger and stronger.

Affected by the appreciation of the RMB, various European currencies also rose that day, but the magnitude was relatively small.

Among them, the euro appreciated by 0.17%, the pound appreciated by 0.75%, and the Swiss franc appreciated by 0.03%.

However, due to the small appreciation of the RMB, various currencies subsequently experienced a correction after digesting this impact.

(2) Impact on the domestic economy 1.

Impact on different domestic industries.

As mentioned above, the appreciation of the RMB will make the price of China's export products higher, reduce its price competitiveness, and thus reduce exports.

Among export companies, resource-based industries will be hit even harder.

At the same time, it will be good for domestic import companies, because the appreciation of the RMB will make the prices of imported products lower, which will help expand imports, especially energy (mainly oil) and resources (iron ore, copper, nickel, etc.)

The decline in import prices will temporarily alleviate the energy and resource bottlenecks that restrict China's economic development to a certain extent.

2.

impact on domestic monetary policy.

(1) Impact on RMB interest rates.

After the RMB appreciates, the prices of imported products will fall, thus driving domestic prices down slightly.

On the other hand, the reduction in exports caused by the appreciation of the RMB will lead to a corresponding increase in domestic product supply, and the increase in supply will also trigger lower domestic prices.

The simultaneous effect of the above factors is that domestic prices fall and the pressure to raise interest rates on the RMB is reduced, but the possibility of deflation must also be prevented.

(2) Impact on money supply.

Since the appreciation of the RMB is only 2%, it will only cause a decrease in the growth rate of China's foreign exchange reserves in the short term, but it is difficult to cause an immediate absolute decrease, and it is also difficult to significantly reduce the resulting foreign exchange reserves.

However, the expectation of further appreciation of the RMB will lead to a significant increase in domestic foreign exchange settlements in the short term, resulting in more abundant funds in the domestic financial market, which will increase the pressure on the People's Bank of China to withdraw currency.

4．

impact on the domestic stock market.

Judging from international experience, a sharp appreciation of a currency with strong appreciation expectations will trigger a large-scale withdrawal of hot money, which will in turn trigger a decline in the domestic stock market.

However, since the appreciation of the RMB is relatively small, there are still expectations for further appreciation.

Moreover, China's stock market has been sluggish recently, and almost all the hot money flowing into the country has not entered the stock market, but has mostly been invested in the real estate market.

Therefore, after the RMB appreciates, even if some hot money withdraws, the negative impact on the Chinese stock market will be limited.

However, after the RMB appreciates, China's steel, petroleum, petrochemical, and tourism stocks will rise sharply, which will be beneficial to the domestic stock market.

It must be pointed out that the current difficulties in China's stock market and the serious lack of investor confidence will greatly offset its positive effects.

5．

Impact on domestic banking industry.

As mentioned before, after the RMB appreciates by 2%, the direct impact will be a sharp increase in the amount of foreign exchange settlement, which will reduce the domestic and foreign currency funds.

This will have an impact on the foreign currency business of domestic commercial banks and trigger intensified competition in foreign currency business among commercial banks.