(1) The depreciation of domestic currency can increase foreigners’ demand for domestic products and reduce domestic residents’ demand for foreign products by reducing the price of domestic products relative to foreign products, which is conducive to domestic exports and imports;
The relatively stronger purchasing power of foreign currencies, the depreciation of domestic commodities and the relatively lower costs of labor services, transportation and accommodation are conducive to attracting foreign tourists, expanding the development of tourism, increasing employment and increasing national income.
(2) The depreciation of domestic currency also has an impact on international capital flows.
If the devaluation trend continues, people will move money from home to other countries, causing capital outflows.
(1) After the depreciation of the domestic currency, the trade income of a country will usually increase, and the proportion of the foreign trade sector in the whole economic system will be expanded, so as to improve the country’s openness, so that more products can compete with foreign products.
(2) It also has an impact on prices.
On the one hand, export expansion leads to demand-driven price increases;
On the other hand, by raising the cost of domestic production and pushing up prices, the effect of currency depreciation on prices will gradually spread to all goods, which can easily lead to inflation.
(1) The exchange rate changes of small countries have little impact on the economy of their trading partners, but the currency depreciation of major industrial countries will affect their trade balance, thus leading to trade wars and exchange rate wars, which will affect the development of the world economy.
(2) Changes in the exchange rates of major industrial countries will also cause turbulence in the international financial field.
In international trade and lending, those who absorb the depreciated currency will suffer losses, while those who pay the depreciated currency will gain.
(3) The instability of the exchange rates of major currencies will also have a significant impact on the international reserve system and the international financial system.
Good for exports.
Since a depreciating domestic currency means that the local currency is worthless, if the currencies of other countries have value, the prices of products priced in the local currency will fall and the prices of products priced in other currencies will rise, which will result in fewer imports and more exports.
Euro Bank signals no rush to raise rates, dollar continues to strengthen Gold falls, U.S. oil up nearly 9 percent this week.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.