Who controls the exchange rates of various countries?

The above answers are all correct, but there are also many flaws.

First of all, please imagine a trade market in LZ’s mind. There are many vendors and buyers in the market. The vendors all sell the same kind of goods, and the buyers only buy this kind of goods. There is no difference at the vendors except the price.

Then, I would like to ask the original poster, what will happen if the goods in the hands of merchants suddenly increase, but the demand of buyers remains unchanged? Yes, the price of goods is reduced. On the other hand, if buyer demand suddenly increases but vendors' supply capacity remains unchanged, the price of the goods will increase.

Okay, if we now study the exchange rate between the US dollar and the RMB. So let’s call this market China’s foreign exchange trading market. There are many people selling U.S. dollars in the market, and many people are buying U.S. dollars. For example, Chinese exporters want to sell the U.S. dollars they earn from exports and convert them into RMB to pay wages, and Chinese importers want to exchange their RMB into U.S. dollars. Buy American products.

So, recalling the previous analysis, if there are many people who want to buy U.S. dollars, or the demand for U.S. dollars is strong, perhaps because of strong import demand or the desire to use U.S. dollars for foreign investment, then buyers will bid against each other, and the U.S. dollar price will A rising tide lifts all boats, and the RMB depreciates relative to the U.S. dollar; similarly, if many people want to use U.S. dollars to buy RMB, the RMB will appreciate.

In this way, if the development continues as mentioned above, the RMB and US dollar markets will gradually reach a stable state, that is, buyer demand = seller supply, and then the exchange rate will be determined. Like the commodity market, this is a basic supply and demand issue. Those who price low sell well, and those who bid high buy more. In other words, it depends on how attractive the RMB and the U.S. dollar are to each other, whether more people want to exchange U.S. dollars for RMB or more people want to exchange RMB for U.S. dollars.

At this point our most important problem has been solved, now ZF begins to appear.

If the market develops normally, 3 RMB can buy 1 U.S. dollar. At this time, a super buyer comes, and this super buyer is willing to buy the U.S. dollar at 6.8 RMB for 1 U.S. dollar. Buy as much as you can. In this way, all those selling US dollars will be eager to sell their US dollars to this super buyer. It is impossible for anyone to use RMB to buy US dollars at a price lower than this. Anyone selling US dollars at a price higher than this Basically no one will buy the U.S. dollar, so the market price has since become 6.8 RMB/1 U.S. dollar.

This super buyer is the People's Bank of China, referred to as the "Central Bank". So where did the central bank get so much money to buy dollars? It's very simple. Don't forget that the central bank has the power to issue RMB. Don't have money to buy US dollars? No problem, just start the money printing press.

At this point, the poster should understand how the RMB-USD exchange rate is determined. (I cried before I understood it...)

China's foreign exchange dollar reserves are the dollars the central bank buys from this market minus the dollars it sells. The more you buy, the less you sell. , the natural reserves are increasing.

So the question is, why does the central bank implement such a policy? Quite simply, keep the exchange rate at the level the central bank wants it to be. Because in the view of the ZF, this exchange rate level is beneficial to China. Facts have also proved that there are indeed many benefits. Just look at how much GDP and employment the export sector has created. Of course, there are also many disadvantages, which will not be discussed here. .

I don’t know the specific content of the Plaza Agreement, but before the Plaza Agreement, the yen was lower against the U.S. dollar than it is now. After that, the yen appreciated sharply against the U.S. dollar, but if Japan also adopts the same open market trading of foreign exchange as China, In terms of policy, if you want to maintain a high exchange rate of the yen against the US dollar, you can do this: buy the US dollar at a high price and sell it at a low price. History has proven that this agreement caused Japan to suffer huge losses, which shows that the higher the currency value, the better.

Finally, I would like to remind the poster that the exchange rate alone has no reference value. This can explain part of the reason why Japan's exchange rate against the US dollar is so low. If a camera sells for 1,000 yuan in China and 1,000 yen in Japan, and if everyone who wants to exchange dollars for renminbi or yen imports cameras from China and Japan to the United States, then the exchange rates of renminbi and yen against the dollar should be constant. But suddenly a camera in Japan costs 999,999 yen, and the price when sold to the United States has not changed. So should dollars be exchanged for more yen? Looking at the actual situation, if Japanese goods are priced in Japanese yen, they are indeed numerically larger than in RMB.

So tired...This is the first time I answer a question on Baidu Knows...