An exchange rate is the rate at which two currencies are exchanged, that is, the price of one country's currency expressed in another country's currency. The exchange rate is a financial tool used by various countries to achieve their political goals. Exchange rates fluctuate due to interest rates, inflation, country's politics and each country's economy. The exchange rate is determined by the foreign exchange market. At the same time, in daily work, the direct quotation method is often used to indicate the exchange rate. For example, 1 US dollar can be exchanged for 7.1 yuan, and 7.1 is the exchange rate of the US dollar to RMB direct quotation method. Moreover, in order to facilitate the efficient communication of exchange rates in the market, market participants often have a conventional way of expressing the exchange rate of a currency. For example, USD/CNH is 7.1549.
At the same time, the exchange rate is also closely related to the import and export trade that foreign trade people are most concerned about. Generally speaking, when the exchange rate of the local currency decreases, that is, the external value of the local currency decreases, the price of imported commodities rises, and the price of export commodities decreases, which can play a role in promoting exports. , the rise in export commodity prices is conducive to imports, which can improve the balance of payments.
Countries with high exchange rate fluctuations
Recently, affected by the global economic situation and the Fed's continued interest rate hikes, the global exchange rate market has continued to fluctuate. The strong dollar policy has caused exchange rate fluctuations globally, especially in emerging markets.
Exchange rate changes have a direct adjustment effect on a country's import and export trade.
Colombia
The Colombian peso has depreciated by 22% since the end of May, adding to the inflationary pressures faced by Colombia in the second half of the year. Inflation is expected to hit an all-time high of 9.32% by the end of the year.
Argentina
The Argentine peso has lost 41% of its value this year and is expected to exceed 50% by the end of the year. On September 20, Argentina violently raised interest rates by 550 basis points, bringing the interest rate to 75%. This is Argentina's ninth rate hike this year, and Argentina's cumulative inflation rate is expected to reach 95% this year.
Nigeria
Since the central bank of Nigeria adjusted its foreign exchange operations to prevent foreign exchange outflows at the end of July, the exchange rate of the country's currency, the naira, has plummeted on the black market, depreciating by nearly 50% from July last year to August this year.
Ghana
In the latest report of the "Ghana Private Infrastructure Investment Medium-Term Recovery Plan", it was revealed that the Ghanaian cedi currency will continue to weaken in the near future. Inflation in Ghana will remain high in the near term in the face of soaring global food and fuel prices.
Egypt
Global risk aversion and other factors led to the large-scale withdrawal of foreign investment in Egypt. The exchange rate of the Egyptian pound hit 19.53 to the US dollar at one point, which was the second lowest on record.
India
The Indian rupee fell to a record low as a stronger dollar and broad risk-off sentiment weighed on global markets. The rupee fell 0.68 percent against the dollar on Sept. 26, hitting a record low of 81.66 rupees to the dollar.