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During the epidemic, what is the impact of the continuous rise of the RMB against the US dollar?

2021-01-14


       
The dollar fell sharply

During the epidemic, what is the impact of the continuous rise of the RMB against the US dollar?

       
Positive Influence
First, promote the balance of international payments and optimize the current imbalance in my country’s current trade surplus. This is because with the rise of the RMB exchange rate, the prices of Chinese products in the global market have been increased, thereby promoting a more reasonable allocation of related resources in the world market, and also significantly reducing the frequency of trade frictions.
Second, it helps to further expand domestic market demand. As the renminbi continues to appreciate, the demand in the domestic consumer market will significantly expand. At the same time, the rise in the renminbi exchange rate will bring about a decline in the prices of imported goods and services, which will invisibly drive the price level of similar products and services in the country to fall, thereby causing consumption in my country. The actual consumption level and consumption ability of the consumers have been relatively improved.
Third, it will help ease the current inflation situation. As the RMB exchange rate rises, the overall price level of imported products will continue to decrease due to the decline in the exchange rate, which will eventually lead to a general reduction in the price level of the whole society, thereby achieving a certain degree of deflationary effect.
Fourth, to enhance the international purchasing power of the RMB in the world market. With the rise of the RMB exchange rate, the price level of imported products and services will be relatively lowered, and the consumption ability of Chinese consumers in imported goods and services will be relatively enhanced. This will help to improve the overall quality of life of Chinese residents, and it may be The relatively tight domestic demand will be eased to a certain extent.
Fifth, it will help promote the further optimization, adjustment and upgrading of my country's industrial structure. As the RMB exchange rate rises, it will promote export-oriented enterprises to continuously improve their technical level and capabilities, improve product levels, improve the efficiency of the use of relevant resources, and promote industrial upgrading, and enhance my country's international comprehensive competitiveness and the overall quality of the national economy.
Negative Impact
First, the development of basic industries and traditional exports has been hit hard. The biggest advantage of my country’s export trade lies in low prices. However, as the RMB exchange rate rises, the prices of my country’s export products and services continue to rise, and the original price advantage is gradually lost, which has caused a huge impact on my country’s export trade. Coupled with the rise in the RMB exchange rate, the prices of foreign products exported to my country have relatively decreased, which in turn has affected domestic industries by fierce competition.
Second, the total domestic demand has been restricted, and it has become more difficult to solve the employment problem. An increase in the RMB exchange rate will cause a low consumption rate in a short period of time, which will inevitably suppress my country’s total demand, thereby curbing the overall economic development, reducing employment opportunities and rising unemployment. In particular, traditional labor-intensive export industries will definitely be affected. The unemployment problem within the industry has gradually become prominent.
Third, rising financial market risks have caused asset bubbles to occur. my country’s financial market is still imperfect, and financial tools used to hedge risks are very scarce. At the same time, some domestic financial institutions have huge non-performing assets, which makes my country’s financial system very vulnerable to shocks. The rise of the RMB exchange rate will gradually lead to greater appreciation, and thus more capital inflows will be introduced, leading to more obvious external imbalances, false prosperity bubbles may also appear, mistakenly introducing economic development in the wrong direction , Leading to potential threats and risks.
Fourth, the internal pressure of rising RMB exchange rate. The continuous appreciation of the renminbi and the continuous depreciation of the U.S. dollar have caused huge losses in the country’s foreign exchange reserves. In addition, my country’s fiscal system has many imbalances, including large-scale bank bad debts, social security fund gaps, local government debts, and urgent The huge pressure to create job opportunities, etc., these hidden fiscal deficits can all be regarded as internal pressures for the rise of the RMB exchange rate.
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