The RMB exchange rate has broken 7 again, and its depreciation in half a year is close to 10%. For ordinary people, what preparations should we make in the face of the exchange rate depreciation?

RMB exchange rate broke 7 again, and its depreciation in half a year was close to 10%. For ordinary people, what preparations should we make in the face of exchange rate depreciation?

Welcome to the logical statement. Have you seen it, friends who have been paying attention to the exchange rate market in the past week? RMB exchange rate against the US dollar has broken through another important threshold, 1:7. Yes, with the strong appreciation of the US dollar today, 1 US dollar can be exchanged for 7 RMB.

You should know that about half a year ago, one dollar was converted into RMB 6, 2, 6, 3, 6, 4 yuan. In just half a year, the US dollar has really appreciated strongly. So many people are worried that what impact will the US dollar continue to appreciate and the development of our country's economy have on the lives of ordinary people?

First of all, the international exchange rate market has changed particularly frequently in the past few years. In 2019 and 2020, the RMB exchange rate exceeded 7, but the RMB immediately rose back. means breaking 7 is an accidental phenomenon, and it may not take long to return the RMB strongly.

On the other hand, have you found out in the international market? The US dollar has been very strong in the past six months. How strong is it? The US dollar is versus the pound, the US dollar is versus the euro, the US dollar is versus the Japanese yen, and the US dollar is versus the Korean won and . On the premise of appreciation of mainstream currencies, the RMB is relatively the strongest, most resilient, and has the lowest depreciation rate. Moreover, the US dollar is so strong that it not only appreciates the mainstream currency, but also appreciates the bulk goods, oil and gold.

So why does the US dollar appreciate? The reason is very simple. The United States raises interest rates on . This year, the Federal Reserve has raised interest rates 4 times in a row. The last two times have increased 75 basis points each time. The Federal Reserve may raise interest rates in late September, and this time it may not be possible to increase 100 basis points. The crazy interest rate hike in the United States has increased to its benchmark rate, and its mortgage interest rate has exceeded 6%.

Why does the United States keep raising interest rates? The reason is very simple, because it previously issued currency indiscriminately, resulting in shocking inflation in . 8 CPI index exceeded 8 percentage points, so in order to suppress this inflation, the United States had to raise interest rates. Why did the RMB finally break 7 in exchange rate a few days ago? It is because the US CPI index in August was released in mid-September. Why did the US stock market fall sharply in this announcement? Everyone realizes that interest rate hikes are essential, and the basis points will increase more and more, so of course the economy will be affected. At the same time, the US dollar will become stronger, and then the mainstream currencies will depreciate against the US dollar.

In other words, the appreciation of the US dollar is a huge pressure for other currencies, but this is not a good thing for the US economy. So for ordinary people, what impact will the depreciation of the RMB exchange rate have on our daily lives? In the past two years, many people have been worried about the arrival of inflation. The so-called inflation and currency depreciation have always been both internal and external. What does

mean inside? It is we who feel that the money is getting bigger and bigger, the purchasing power of the RMB is declining, and the price of items is rising. The so-called external is that the ratio of RMB to the US dollar is falling, resulting in the decline in the purchasing power of RMB in the international market. What everyone is most worried about is that the RMB in both domestic and foreign markets are depreciating and money is becoming more and more frigid, so the purchasing power of the money in our hands is getting smaller and smaller, so it is true that the depreciation of the RMB against the US dollar will have an impact on our daily lives.

This depends on several aspects. Before the epidemic, many people were willing to travel abroad and study abroad to work. At that time, if the RMB depreciated against the US dollar, it was very simple. When you go to the United States, you will find that the money in your hands is not that valuable. In the past two years, a dollar could only be converted into RMB 6.2 or RMB 6.3. Now, a dollar is converted into RMB 7. If you are also going to the United States, then you will have to spend 10% more money.

But of course, our travel destinations and study destinations are not necessarily the United States, it may be Europe, Japan, or South Korea. The currency value of these countries is even stronger than that of the United States. Therefore, the RMB will appreciate in value against the pound, the euro, the Japanese yen and the Korean won. So if your travel destinations and study abroad destinations are among those countries, you will not feel the depreciation of the RMB and our purchasing power is still increasing.

On the other hand, due to the impact of the epidemic in the past two years, the number of people traveling abroad has dropped sharply, but this does not mean that our RMB should not be used in the international market. We still need to import a large amount of materials every year. What are imported? From a national macro perspective, we need to import energy. Today we are the world's second largest economy and the most powerful industrial country, so we need to import a large amount of energy raw materials to complete our economic development. Then the international bulk materials are often priced by the US dollar. The RMB depreciates against the US dollar, which means that the money we spend on importing these materials will increase.

So have you found out? Since the first half of this year, on the one hand, the amount of bulk materials such as oil, natural gas, , coal, etc., we have imported is decreasing, but on the other hand, the money we have to spend has increased. Why ? The impact of the Russian-Ukrainian war, the prices of these bulk materials are increasing, and the depreciation of the RMB against the US dollar is equivalent to increasing the amount of money we have to spend. This is the so-called imported inflation.

Oil prices have increased, domestic gasoline prices must be increased, logistics prices must be increased, and terminal retail products must be increased. Of course, we not only import energy, but also import a large amount of soybeans and fruit seafood. When the US dollar appreciates against the RMB, it is equivalent to the appreciation of the prices of these items.

As ordinary people spend the same money, the amount of imported materials we want to use is getting smaller. In a common sense, When the RMB depreciates from the outside world, the price of imported materials will rise. When the RMB depreciates internally, it is equivalent to the price of buying domestic products that are rising, so we ordinary people must be prepared.

In recent times, due to the strength of the US dollar and the slow rise of domestic inflation in my country, it is very likely that prices will rise in the next few months. Officials of the National Development and Reform Commission also issued a warning half a month ago. We may have to live a period of relatively high prices, but on the other hand, is the depreciation of the RMB really useless? Is there no benefit? Obviously, this is not the case. The so-called profit and loss are of the same origin. There are advantages and disadvantages. After the RMB depreciates, although we have to spend more money on importing materials, the price competitiveness of our export materials has increased. What does it mean?

RMB has depreciated. Our exported materials are calculated in US dollars. What we take back is RMB, which is equivalent to exporting the same materials. Otherwise we can make more money, otherwise we can suppress this price and form price competitiveness. You should know why Trump added tariffs on Chinese goods back then? It is because the tariffs can crack down on the price competitiveness of Chinese goods, which has caused our exports to plummet.

Now the depreciation of the RMB has greatly increased the competitiveness of our exports, which is why we have seen my country's exports soaringly in the past few months. The surplus in a month exceeded US$100 billion. Today, competition between countries is becoming increasingly fierce, especially the two major powers, China and the United States, are increasing and declining here. The United States is desperately trying to reduce Chinese goods exported to the United States, even if it imposes a 25% tariff. For us, we must maintain a huge export to keep the economic carriage moving forward. So in this sense, the depreciation of the RMB may not be a completely bad thing.