What Is Currency Appreciation?
Currency appreciation is a symmetry of "currency depreciation." Under the conditions of the gold standard, increase the legal gold content of domestic currencies and increase their parity with foreign currencies. Under the conditions of currency circulation, currency appreciation is divided into two types: internal appreciation and external appreciation. The appreciation of foreign currency refers to increasing the local currency exchange rate (reducing the foreign exchange rate). The appreciation of banknotes is highly subjective, and is a specific decision made by the country according to a specific economic situation. It is generally implemented under a situation where the balance of payments surplus is too large and the foreign exchange reserve is excessive. In recent years, some countries have also adopted a method of appreciation of foreign currencies to prevent foreign currency shocks and resist foreign inflation. [1]
Currency appreciation
- Currency Appreciation, also known as "currency appreciation," refers to a country's ability to increase the value of its currency against foreign currencies by increasing the gold content of its currency
- The specific performance is:
- (1)
- In the U.S
- The primary reason that currency can add value is that it is a form of capital that can be used as capital in the production and operation of an enterprise. After a period of capital circulation, it will generate profits. This profit is the appreciation of money. Therefore, if the currency does not participate in production and operation but is hidden on an island like a pirate's treasure, it will obviously not add value.
- The reasons for the financial industry's gains in currency appreciation are relatively complex, but the mechanism is similar to the above in which the appreciation of the real estate industry benefits from currency appreciation. Succeed
- Historical experience and practical conclusions have shown that currency appreciation will not have a good result for any country. Currency appreciation speculated by old theories helps
- Exploration is limited to the two links of product exchange price and currency exchange price: In the product transaction analysis framework, people think that currency appreciation helps
- Simply put, currency appreciation has led to an increase in the cost of exported goods, which has curbed exports; on the contrary, it has restrained imports. But the impact of currency appreciation
- Currency appreciation
- RMB appreciation will be long-term positive for industries that rely primarily on foreign procurement of raw materials or equipment, or have highly liquid RMB assets; a one-time exchange gain for industries with large US dollar foreign debt; and industries that are export-oriented And the international pricing of products has a greater impact on the industry.
- Import of raw materials and high foreign currency debt industries
- Appreciation is good for industries that rely mainly on foreign procurement of raw materials or equipment or have large additional debt, such as aviation, papermaking, electricity, construction machinery, etc.
- Capital inflows benefit real estate and finance
- In the process of appreciation, the real estate and financial industries, due to their better liquidity and liquidity, will attract a large inflow of international hot money, which will obviously benefit relevant listed companies.
- Exports and international pricing industries are affected
- Weakening the competitiveness of export-oriented industries. For export-oriented industries and listed companies, the appreciation of the RMB will greatly weaken the competitive advantage of products and have a greater impact on company performance. Such as foreign trade, textile and clothing, home appliances and other industries.
- International pricing-based industries have been hit hard
- In the petrochemical industry, appreciation has different effects on industries in different positions in the petrochemical product chain.
- Less affected industries
- Transportation (highway, port, shipping)