What is exchange rate and what is the essence of exchange rate

Foreign exchange rate/

What is?foreign exchangeForeign exchange is the means of payment that foreign currency or foreign currency can be used for international settlement. So no matter what industry we do, we must have heard of it, especially as investors. What is exchange rate? What is the essence of exchange rate?

In the era of legal paper money, the exchange rate is actually a lever - a lever to leverage the wealth of the other country. Why do you say that? Let's give an example: now the RMB is converted into RMBdollar1: 6.8, 1 dollar can buy 6.8 yuan. If the RMB devalues to 1:10000 (1470 times), Americans can "exchange" the wealth created by the Chinese people in one year with 2 billion US dollars. As for the specific definition of exchange rate, we still need to see the following:

1. The exchange rate is the exchange rate between the currencies of two countries. Currency has the function of value measurement. Exchange rate is to solve the problem of value measurement of different currencies. Through the exchange rate to achieve a unified value measurement. For example, the exchange rate of 1 US dollar to 6.8 RMB is the exchange rate between RMB and US dollar. It shows that US dollar has more purchasing power than RMB.

2. The essence of exchange rate is the most critical denominator in the economic and trade war between countries, and it is the lifeblood of international trade and international settlement. If the manufacturing and export capacity is a molecule, a country may also be able to export more and reduce imports, such as our previous export tax rebate policy to encourage exports, but if a country can not decide its own exchange rate, it is very dangerous.

What is the exchange rate? What is the essence of the exchange rate? Xiaobian will introduce you here. I hope the above content can help you. You can decide whether you want to buy foreign exchange or not according to the above content and your own situation, and choose your own foreign exchangefinancial productsFinally, I hope you can invest smoothly!

[disclaimer] the publication of this article by finance managers for the purpose of transmitting more information does not mean that they agree with their views or confirm their descriptions. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk

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