Why Is The US Dollar So Devalued?

On the evening of April 10th, Lagarde, President of the IMF, made a different statement, saying that the move of the central bank was an action of RMB in the direction of internationalization and did not intend to devalue the renminbi.

The seemingly professional exchange rate data is not far from our life: for ordinary consumers, the rise and fall of the RMB exchange rate affects the amount of dollars exchanged; in foreign trade enterprises, the fluctuation of exchange rate affects the profit level. But at a more macro level, exchange rate is a direct manifestation of the economic game between countries.

　 Sorrow and happiness brought by depreciation

Yesterday morning, Yan Jie, who lived in Tung Po Hutong in the East, went out to the Bank of yalpo road. Her son went to college in the United States and regularly changed money to the bank, which has been a compulsory course for Ms. Yan in recent years.

After changing $10 thousand, she looked at the figure of 62204 yuan on bank settlement documents, and Ms. Yan frowned slightly. "Last year, every time I changed, I spent less than I did last time. I feel that RMB is becoming more and more valuable." I just changed 10 thousand dollars at the beginning of the year, when the price was only 60621 yuan. "

Three months apart, the exchange of US $10 thousand made Ms. Yan spend more than 1583 yuan. In 2013, the renminbi showed an accelerated appreciation against the US dollar. The RMB exchange rate has risen 41 times throughout the year, and its appreciation is almost 3 times that of 2012. However, since the beginning of this year, the RMB exchange rate has said goodbye. In the first quarter, the yuan depreciated to about 2.6% against the US dollar, almost reflecting the full year rally in 2013.

The same trend of RMB exchange rate does not seem to be good news for Ms. Yan, but Zhang Dongqing, the exporter of children's clothing, has breathed a sigh of relief.

Because of the US dollar settlement, the clothing orders for spring and summer this year have already been sold to Zhang Dong Qing by US dollars in advance. "The recent settlement of foreign currency, the renminbi is more, the difference is more profits." From the end of last year, the central parity rate of RMB against the US dollar reached 6.08 to nearly 6.2, although the exchange rate of 1 yuan seems to be only about 0.1 yuan, but for hundreds of thousands of dollars in export orders, it is not a small number. "With this exchange rate, profits will increase by about 1%."

Behind the changes in the RMB exchange rate, it will not only affect the hearts of consumers and foreign trade dealers.

　 　 exchange rate Behind is a game.

A senior US Treasury official said recently that if the recent fall in the renminbi implied that the Chinese government intended to abandon the RMB exchange rate marketization plan, it would cause serious concern in the United States.

What is the reason behind the pressure of RMB depreciation and frequent pressure on the US? In fact, "serious concern" is the pressure on the us to exert pressure on the RMB through the orally to shift the financial and economic risks of the emerging market economies resulting from the exit effect of the quantitative easing (QE) policy.

In international financial markets, exchange rates are not as simple as they are defined. To say small, the exchange rate imperceptibly affects our lives. To the big point, behind the exchange rate is the game between countries.

October 30, 1989, New York's most prosperous Manhattan Central District, Rockefeller Center. After signing the takeover agreement, Takagi Taketaro, the president of MITSUBISHI land company in Japan, showed an unnoticed smile on his lips. In the busiest city in the United States, MITSUBISHI land company spent $1 billion 373 million to buy 14 office buildings in the most prosperous area of Rockefeller Center. According to the exchange rate of 1 US dollars to 160 yen, MITSUBISHI land's investment amount was 218 billion 800 million yen, becoming a controlling shareholder with 80% stake in Rockefeller Center.

This has made the American society in an uproar. The US media exclaimed: "Japan is going to buy the United States!" "this is another Pearl Harbor event that Japan has implemented economically."

The two opposite mood is the portrayal of the economic situation of Japan and the United States at that time.

In the 80s of last century, the Japanese economy entered a period of rapid development. In 1985, Japan replaced the United States as the largest creditor in the world, and the products made in Japan flooded the globe. At the same time, the US external trade deficit has expanded year by year. The government is eager to strengthen the external competitiveness of us products through the depreciation of the US dollar, so as to improve the imbalance of international payments.

In September 22, 1985, the United States, Japan, the Federal Republic of Germany, France and the United Kingdom, the finance ministers and the central bank president (G5) at the New York Plaza Hotel, reached the five governments' joint intervention in the foreign exchange market, and induced the US dollar to depreciate the exchange rate of the major currencies in order to resolve the agreement on the huge trade deficit of the United States. Due to the signing of the agreement at the Plaza Hotel, the agreement is also known as the Plaza Accord.

　 　 Yen Firm cost

After the signing of the "Plaza Accord", the five countries began to intervene in the foreign exchange market jointly, selling a large amount of dollars in the international foreign exchange market, and then forming a market investor's selling frenzy, which led to a significant depreciation of the US dollar. Less than three years later, the US dollar depreciated to 50% against the yen.

The yen is becoming more and more valuable. In the past 5 years, the share price of Japan has increased by 15% every year at 30% and the land price, and the wealth of Japanese has increased greatly. The prices of real estate in the United States, Europe and other countries in the world are very cheap in the eyes of the Japanese. As a result, Japan invested a lot of money in real estate all over the world.

In the song of "the spring of the north", "Qian Changfu", who sang red Japan, was a popular singer at that time. A bank found him and advised him to invest in five star hotels in Hawaii. "I have nothing to guarantee," said Qian Chang Fu. The bank said, "your name is the best guarantee." As a result, a total of five banks have been lending to Qian Changfu without any guarantee. He not only invested in hotels, but also invested in golf courses in Hawaii, and the total amount of loans that five banks lend to him amounted to 270 billion yen.

At that time, Japan did not think that the end of prosperity was just a ruin. As the currency continued to appreciate, the nominal GDP growth in Japan was only 5% during the same period, and the economic bubble began to expand. The Japanese government also implemented the "low interest strategy" in 1987, reducing the real interest rate to 2.5%, trying to maintain the high economic growth with bubbles and inflation, and the Japanese economy soon suffered heavy losses.

In 1989, the Japanese government began tightening monetary policy. Although it broke the bubble economy, stock prices and land prices fell by about 50% in the short run. Banks formed a lot of bad debts. The Japanese economy entered a decade of recession.

In 1994, Americans bought the Rockefeller building from MITSUBISHI land. Between buying and selling, MITSUBISHI land company lost nearly 100 billion yen in 5 years.

　　 Low interest bubble

From high-speed growth to long-term stagnation, Japan's experience is a warning to emerging countries. As the most important exporter of products, China's foreign exchange reserves have ranked first in the world, and the RMB is facing tremendous pressure of appreciation.

"The situation in China is still very different from that in Japan." Qiu Sisheng, director of research and investment analysis at Citibank retail bank of China, gave a set of data: the exchange rate of RMB against the US dollar has basically depreciated for 4.7 consecutive years in 1994, after a sharp depreciation of 8.27 to $8.27 in January. Until the first exchange reform in July 21, 2005, the yuan began to appreciate, and the average annual appreciation was about 4% to 5%. In June 2010, the second exchange rate reform, the RMB reopened the appreciation mode until the end of 2013, the annual appreciation rate is about 3% to 4%.

"Unilateral appreciation of the renminbi every year has indeed affected some export enterprises, but in the long run, this is not a structural reform that will strengthen the weak and remain strong." Qiu Sisheng said that in view of the appreciation of the yen, the fluctuation of the yen has been above two digits every year. Such a sharp fluctuation has made Japan a large number of truly powerful international companies, but it is a disaster for most of the small and medium-sized enterprises, and it is also a factor of economic recession.

"China should take the path of Germany's currency reform instead of Japan's old road." Financial analyst commentator Ye Tan said that when a large number of foreign exchange reserves, huge trade surplus, capital return and total factor productivity were comprehensively upgraded, it shows that the exchange rate has an internal driving force. When exchange rates rise, hedging negative effects with low interest rates is a wrong decision. Japan's low interest rate strategy in the 70s and 80s of last century did not change the economic structure of overcapacity, but instead made a large number of low interest funds enter the real estate market. In Germany, the economy can afford to expand the range of exchange rate fluctuations, strictly control interest rates, and prevent asset price bubbles caused by low interest rates.

　　 News viewpoint

　　 Financial reform Giving priority to advancing exchange rate marketization

Yi Gang, vice president of the people's Bank of China, said in Washington on 10 th that China will advance financial reform step by step and coordinate with each other, giving priority to advancing the exchange rate marketization in order to reform.

Yi Gang said frankly that China's financial reform is subject to certain conditions. Taking the interest rate liberalization reform as an example, from the micro level, many enterprises and local government financing platforms lack the budgetary hard binding mechanism, are not sensitive to interest rates, and have not yet prepared for the marketization of interest rates. From a macro perspective, the current Chinese economy is facing some downward pressure. If the interest rate liberalization is fully liberalized now, short-term interest rates and financing costs will not be conducive to stabilizing economic growth.

Zhou Xiaochuan, governor of the people's Bank of China, said that in the future, the RMB exchange rate will be determined to a greater extent by the market and gradually withdraw from normal foreign exchange intervention. The daily fluctuation range of the RMB exchange rate will continue to expand.