The advantages and disadvantages of currency appreciation

Since 2017, due to the continued weakness of the US dollar, RMB and other non US currencies have been appreciating all the way. thatappreciationIs it good or bad for a country's economy? What kind of impact will China's RMB appreciation have? How can the country say?

What is currency appreciation? Currency appreciation represents an increase in the purchasing power of a country's currency. It is obvious that: at present, the same RMB can be converted into more US dollars, and the purchasing power of currency in the United States has increased. Generally speaking, the appreciation of a country's currency represents its excellent economic development and its international reputation.

Is currency appreciation good or bad? Although currency appreciation symbolizes the strength of a country, it is not entirely a good thing. Just like the Plaza Accord in 1985, the yen rose sharply, and the consequence was that Japan's holdings of U.S. Treasury bonds shrank and assets flowed into the U.S. in disguise. In addition, the reduction of Japan's export competitiveness has led to serious consequences for Japan's export-oriented economy, which has resulted in Japan's continuous monetary easing to promote its domestic economy.

For the United States at present, the depreciation of the US dollar makes most of the countries with us dollar as foreign exchange reserves pay for the United States in disguise, but it also makes many investors come out of the U.S. market and focus on other markets. The appreciation of the RMB will attract more overseas investment, but similarly, if the appreciation is too much, it will be a severe challenge for China's export. Therefore: how to reasonably appreciate is the most important thing at present.

Due to the weakness of the US dollar, the monetary relations between countries and the US dollar are approaching. In addition to RMB, the euro is also the biggest beneficiary of the US dollar depreciation in 2017. However, the European Central Bank still calls for a strong US dollar. It can be seen that the current rate of dollar depreciation puts pressure on the EU, just like the pressure of RMB appreciation.

The appreciation of RMB will lead to the rise of stock market, real estate and bonds, which will eventually be reflected in the investment industry. However, from the current attitude of China, appreciation is a good thing, which will provide more favorable conditions for RMB internationalization. Moreover, the pressure of capital outflow will be reduced, and the impact on export is still playing. However, if it is strengthened, it will be a potential risk for trade.

The appreciation of RMB and other currencies and the depreciation of the US dollar are in the state of 2017, and this situation has been maintained in the beginning of 2018. At present, the US dollar index has fallen below the 90 mark, while the RMB has appreciated to about 6.326, there is still a possibility of further appreciation in the future.

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