Why Is The Stock Market So Volatile In Exchange Rate Movements?

As the price of funds, interest rate plays a significant role in the stock market.

In particular, the risk-free return rate based on the benchmark interest rate has the most direct impact on the risk compensation level of the stock market.

Therefore, interest rate is an important reference index for investors to participate in stock market investment.

At the end of 2014, the reason why the Shanghai and Shenzhen stock market rose sharply was a very important driving factor when the central bank started to cut interest rates, which made the interest rate of China's capital market fall into a downward channel, thus effectively changing the financial structure at that time, and a large amount of capital poured into the stock market, thus triggering a vigorous rise.

Perhaps the depreciation of the local currency reflects the worries of the real economy, and the stock market, as a barometer of the national economy, has already reflected this in advance.

And when the exchange rate trend appears weak, its negative impact on the stock market seems to have been released, so that the market can not be further suppressed.

Of course, it will take some time to prove this.

after all

Changes in external patterns are sometimes advanced, but sometimes they lag behind.

However, since the second half of last year, the interest rate of investors in the stock market seems to have begun to decline. This is because the benchmark interest rate in China has dropped to a low level after a series of interest rate cuts. As a risk free yield, the interest rate of the ten year treasury bonds has also returned to below 3%.

Comparing the inflation level here, it is obvious that the negative interest rate situation has appeared.

Based on China's national conditions and related systems, we continue to cut interest rates and implement them to a greater extent.

Policy is unrealistic.

Of course.

The possibility of raising interest rates can be ruled out when the situation is still very weak.

This means that the space for interest rate adjustment is basically gone.

For investors, the interest rate mainly depends on the trend of change. If interest rates will remain at a certain level for a period of time, there is no need to spend more energy to care and predict the trend of profits.

Correspondingly, many investors have to start paying more attention to exchange rate.

In the long run, there will be more fluctuations in the exchange rate of RMB against the US dollar.

As the price of local currency in the international market, the change of exchange rate not only has a significant impact on the enterprises engaged in export-oriented economy, but also objectively reflects the overseas evaluation of the economic situation of the country, so it also has a significant impact on the investment market.

Therefore, how the exchange rate will affect the stock market is an unavoidable issue at this stage.

After all, no matter whether the depreciation of the stock market leads to a fall in the stock market or the depreciation of the currency is conducive to the rise of the stock market, we can find an example.

Looking back at the stock market of Shanghai and Shenzhen from 2005 to 2007, one of the three basic reasons we recognized was the appreciation trend of RMB.

However, since the Chinese economy began to slow down, the RMB exchange rate, which is already very close to the equilibrium exchange rate, has gradually suffered the pressure of devaluation.

Although devaluation has multiple effects on the real economy, in most cases, the passive depreciation of the local currency still has a big negative impact on the confidence market like the stock market.

In fact, since August last year, the Shanghai and Shenzhen stock markets have fallen substantially each time, which is related to the devaluation of the renminbi in varying degrees.

Such a reality also forces investors to pay great attention to exchange rate changes.

From the market analysis level, interest rates can not be ignored, but now perhaps more attention should be paid to exchange rates.

Because the exchange rate trend is changeable, and there is a lot of uncertainty in operation, the impact on the stock market is very complicated, and it is not easy to judge. This will urge investors to spend more power to study and ponder.

There is such a case to mention here.

Far from it, the RMB exchange rate has been significantly adjusted at the beginning of this year, and the stock market is also plummeting at the same time, so people generally link the two.

Now, after the Fed's signal of the possibility of raising interest rates in next month or July, the RMB exchange rate has again undergone a major adjustment. The middle price has returned to the level of 2011, and the Shanghai and Shenzhen stock markets here are still relatively plain.

What does this mean? What is the effect of the exchange rate on the stock market or whether the stock market has been down? If the exchange rate does not depreciate, the market will go up. Indeed, it may not be clear that these problems can only be explained by the trend of a few days, but the facts are obvious, so there is reason to study them well.