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Theory of exchange rate determination and interpretation of economic data (III)

2023/2/26 12:23:33  Classification:   Participation: 8  

Three rebatesinforex of payments theory 1. Theory elaboration The balance of payments theory holds that rebateinforextrading the foreign exchange market, the balance of payments surplus cashback forex expressed as the supply of foreign exchange is greater than the dem best forex rebate for foreign exchange, then the foreign currency depreciates and the local currency appreciates; the balance of payments deficit is realized as the supply of foreign exchange is less than the demand for foreign exchange, then the foreign currency appreciates and the local currency depreciates But whether the balance of payments situation affects the exchange rate depends on The nature of the balance of payments surplus (deficit) bestforexrebatehort-term, temporary and small balance of payments differences can be easily offset by international capital flows, relative interest and inflation rates, government intervention in the foreign exchange market and other factors Long-term large balance of payments surpluses (or deficits) can lead to large changes in the exchange rate of the domestic currency against the foreign currency For example, the current depreciation of the dollar is the result of the accumulation of the rebatemeaninginforex.S. trade deficit and The predecessor of the balance of payments theory is the theory of international borrowing and lending. The British economist G.L. Goschen, in his TheoryofForeignExchange published in 1861, systematically explained the main reasons for exchange rate changes under the gold standard and put forward the main ideas of international borrowing and lending.  a) international borrowing refers to a countrys balance of payments position, the current account and capital account balance constitute the international borrowing balance in a certain period (such as a year), the balance of payments surplus is called international borrowing out, the amount of the excess is the countrys net claims on other countries; balance of payments deficit is called international borrowing in, the amount of the excess is the countrys net debt to other countries international borrowing reflects the dynamic differential relationship of a countrys balance of payments Ghosn believes that the main factors that trigger international borrowing and lending are the import and export of goods, the purchase and sale of stocks and debts, the receipt and payment of profits and donations, capital transactions, etc. b) Ghosn believes that the exchange rate depends directly on the supply and demand of foreign exchange, international borrowing and lending relationship is the key to influence the fluctuation of the exchange rate a countrys international borrowing and lending out, the international market supply of the countrys currency exceeds the demand, the countrys currency appreciation; conversely, a countrys international borrowing and lending in excess, the international The international borrowing and lending theory explains the direction of the exchange rate from the perspective of the international payment function of the currency, a fundamental use of foreign exchange is a means of payment, that is, to buy foreign products, services and assets (such as real estate, bonds, etc.) In the past closed economy era, there is no international borrowing and lending problems, because people are self-sufficient, no need to buy foreign products and services From this perspective, the impact of the balance of payments on the exchange rate, as revealed by international borrowing and lending, is inevitable and obvious. For example, the financial crisis in Thailand in 1997 and the financial war in Hong Kong in 1998, a countrys export competitiveness and ability to attract foreign capital often affect its balance of payments conditions. According to the definition of balance of payments, the current account deficit needs to be compensated by the surplus under the capital account, so another data, the net capital inflow of the United States, is also the focus of market attention. BalanceofPaymentsStatement is a systematic record of all foreign exchange payments and receipts of a country in a certain period (one year, half a year, one quarter or one month), and the application of accounting principles, is prepared in accordance with the debit and credit balance of accounting, after adjusting the final balance of receipts and payments on the books of statistical statements it includes current account ( The current account is the most important and basic item, and is a real item, the transactions recorded are characterized by the transfer of ownership. Therefore, the interest, dividends and profits derived from borrowing and lending capital are part of the current account. The balance of payments item is a record of compensating transactions when there is a shortfall or difference in independent transactions, and a record of accounting adjustments for the final official balance. In the balance of payments, when the foreign exchange revenue generated by external transactions exceeds the expenditure, the balance of payments is in surplus (FavourableorActiveBalanceofPayments); conversely, the balance of payments is in deficit ( UnfavourableorPassiveorPayments). UnfavourableorPassiveorAdverseBalanceofpayments) is usually preceded by a "one" sign or written in red, thus the balance of payments deficit is also called the balance of payments deficit, while the balance of payments surplus is The U.S. twin deficits are caused by a combination of excessive spending by the U.S. government and U.S. residents. The twin deficits are the simultaneous existence of the U.S. fiscal deficit and the current account deficit. The original meaning of twin deficits was actually "twin deficits", but the Clinton administrations practice disproved this understanding. The U.S. current account deficit is also the result of overspending and under-saving of U.S. residents, while the low saving of U.S. residents is inseparable from the U.S. social security system, housing mortgage system and other systems that encourage consumption The U.S. twin deficits, especially the current account deficit, have endangered the stability of the U.S. economy and the world economy "9-11 After the "9-11" incident, the U.S. fiscal spending has increased sharply, the fiscal deficit has expanded rapidly, and has driven the current account deficit to increase further in 2004, the U.S. fiscal deficit has reached $425.5 billion, the current account deficit reached $665.9 billion, accounting for 3.6% and 5.7% of GDP respectively. If external financing is no longer available to support the growing overspending, the U.S. will suffer the double blow of a vicious depreciation of the U.S. dollar and a sharp contraction in consumer investment, which will endanger the stability of the world economy as a whole. The U.S. government has made reducing the twin deficits one of its main economic policies in order to maintain the confidence of international capital in U.S. dollar assets 1) Fiscal Deficit Data released by the U.S. Treasury Department on February 12 showed that the U.S. federal deficit dropped significantly in the first four months of fiscal year 2007, which began on October 1 last year, mainly due to a large increase in tax revenues, which reached a record level. In the four months ended January this year, the U.S. government deficit of $42.2 billion, compared with the same period last year, a sharp decline of 57.2% of which, government tax revenues increased by 9.7% to $834.1 billion, a record high; government spending increased by only 2.1%, a total of $876.3 billion, also a record high in January this year, the U.S. government fiscal surplus of $38.2 billion for the month Government spending was $222.4 billion and revenues were $260.6 billion The U.S. government deficit, which hit an all-time high of $413 billion in fiscal year 2004, fell to $247.7 billion in fiscal year 2006, the lowest point in the past four years The Congressional Budget Office has projected a government deficit of about $200 billion for the current year, with the Bush administration forecasting $244.2 billion The Bush administration also The Bush administration also plans to eliminate the deficit by 2012 to achieve fiscal balance 2) MerchandiseTradeBalance This figure is usually published at the end of each month, reflecting the difference between the total imports and exports of goods in the previous month The change in the U.S. trade balance will directly affect the demand for the dollar, but also affect the flow of international capital, thus causing the dollar fluctuations in the exchange rate usually the growth of the trade surplus will support the dollars exchange rate, while the emergence and widening of the trade deficit caused downward pressure on the dollar 3) Net capital inflows to the U.S. The monthly international capital flows data released by the U.S. Treasury on August 15, 2005, showed that net capital inflows to U.S. assets increased to $71.2 billion in June, higher than expected and sufficient to cover the trade deficit for the month The size of net capital inflows in June Higher than Mays revised $55.8 billion U.S. trade deficit of $58.8 billion in June analysts originally expected net capital inflows of $65 billion in June U.S. financial markets will report net capital inflows as a measure of foreign interest in U.S. assets, but the U.S. Treasury said the report does not fully reflect whether the United States has attracted sufficient funds to fill its trade deficit, because the capital flow data does not include direct investment or bank account status

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