First of all, from the perspective of profit appreciation and depreciation:
Appreciate:
1, a country's currency can appreciate, which generally shows that the country's economic situation is good. Because under normal circumstances, only when the economy grows healthily and steadily can the currency appreciate. This stable appreciation of the currency brought about by the good economic situation is very attractive to foreign investment.
China still has a high foreign trade surplus and huge foreign exchange reserves, and China's economic growth is still the most interesting scenery in the world, so the long-term trend of currency appreciation will not change.
3. It is conducive to reducing the pressure of debt repayment. With the rise of RMB exchange rate, the amount of local currency required for servicing outstanding foreign debts will decrease accordingly, thus reducing the foreign debt burden to some extent.
4. RMB appreciation can reduce inflationary pressure and effectively cool the overheated macro-economy. Due to the undervaluation of RMB exchange rate, a large amount of international hot money flowed into China, resulting in overheating of economy and inflation of real estate bubble. RMB appreciation can effectively solve this problem.
5. The appreciation of RMB is also conducive to industrial upgrading and the reform of China's economic structure, the transfer of industries to poor areas in the central and western regions, and the development of service industries and non-trade industries.
Devaluation:
1. If the local currency depreciates, the purchasing power of foreign currency will be strong, so that a certain amount of foreign currency can buy more domestic products, which means that the price of domestic products is relatively cheap in the international market, thus increasing exports.
If the local currency depreciates, the price of foreign goods will be expensive, so domestic imports will inevitably decrease. Therefore, the result of RMB depreciation is to expand exports, curb imports, increase trade surplus and promote economic development.
Second, from the disadvantages of appreciation and depreciation:
Appreciate:
1, the economic effect of RMB appreciation is equivalent to the overall increase in export commodity prices. Of course, the consequence is to curb exports, which is obviously not conducive to economic development.
2. The rapid appreciation of RMB will reduce foreign direct investment. If the renminbi appreciates, it means that foreign investors have to pay more dollars, and the consequence is that foreign investment will decrease.
This will lead to an increase in unemployment rate. In China, exports account for about 30% of GDP. If the local currency appreciates, export enterprises will inevitably lose money or even close down, leading to unemployment and further increasing the hidden danger of social instability.
This will further expand the scale of foreign debt. The appreciation of RMB exchange rate will attract a large amount of capital to flow into China's capital market and correspondingly expand China's foreign debt.
5. Affect the stability of the financial market. Most of the capital markets are active in international hot money, which is a potential factor of financial market turmoil because of its large scale, fast flow and strong profitability. In the case that China's financial supervision system needs to be further improved and the development of financial market is relatively lagging behind, the profit-seeking behavior of a large number of short-term capital flowing into the capital market through various channels will easily lead to a monetary and financial crisis and adversely affect the sustained and healthy development of China's economy.
Devaluation:
1, the depreciation of local currency will cause trade friction, which is extremely unfavorable to the national economic stability.
2. Devaluation will not solve the problem of slowing external demand. Although depreciation will help export enterprises survive by reducing costs, it is difficult to last. Especially for industries that have lost competitiveness in China, depreciation will only delay the withdrawal of industries.
Extended data:
Overall relative stability The exchange rate remains relatively stable. Apart from the choice of unilateral appreciation and depreciation of the RMB exchange rate, this is also a choice of exchange rate changes, which is probably the most desirable idea of RMB exchange rate reform under the current turbulent international economic situation.
The Central Economic Work Conference held on February 8, 2008 also proposed to "maintain the basic stability of the RMB exchange rate at a reasonable and balanced level and further improve the balance of payments". In fact, this view is essentially the same as the one that has been emphasized since the exchange reform. However, no matter which side they stand on or hold high the banner of maintaining stability, all parties have their own reasons and logic.
Baidu encyclopedia-RMB exchange rate