As we all know, the world's most valuable currency is the US dollar, under the hegemonic influence of the United States and gold reserves, the US dollar has dominated the global payment system for many years. But with the recent frenzied printing of money by the United States, the value of its currency has also fallen, and countries have begun to de-dollarize. At this time, China's currency ushered in an appreciation moment, not only more and more countries choose to settle in the renminbi, but also many foreign capital investment in China's national bonds. Recently, Henan has discovered a huge gold mine, with a total reserve of 31.55 tons, which has increased China's gold reserves significantly.
Under the influence of various factors, the Sino-US exchange rate finally fell below 6.4, and has now dropped to 6.3924, which shows that the renminbi has appreciated again! In the past, the US dollar could be exchanged for 6.4 yuan, but now it can only be exchanged for 6.3924 yuan, which seems to have little impact, but it is a key step taken by China's currency. With the diametrically opposed development trend of the Sino-US economy, China's currency will become more and more valuable, and now the exchange rate has fallen below 6.4, and perhaps in the near future the Sino-US exchange rate will become 1:1. So what happens if the renminbi and the dollar become 1:1, good or bad for our country?
In fact, there are pros and cons. First of all, the benefits, the Sino-US exchange rate has become 1:1, indicating that the renminbi is already very valuable, and the most intuitive impact is that China can buy more things with the same money than before. What Apple mobile phones, donkey bags, luxury cars and villas will become ordinary commodities, people can afford it casually, and the standard of living will be much better than before, just like the United States today. In addition, the status of the renminbi in the world will also rise, which is particularly important for China's economy.
However, the disadvantage is also obvious: after the appreciation of the renminbi, imported products will become cheaper, but domestically manufactured goods will become expensive. At that time, it is bound to have a violent impact on China's manufacturing industry, resulting in the closure of enterprises, followed by the situation that the people face layoffs and unemployment. In addition, appreciation will also raise the threshold for foreign-funded enterprises to invest, because the cost of goods manufactured in China will be higher than that of other countries, which will eventually lead to the loss of foreign investment. At that point, these foreign companies will choose to move their factories away from countries where labor is cheaper, but that's not the end of it.
The appreciation of the renminbi will also lead to the depreciation of China's foreign exchange reserves, as one of the countries with the largest foreign exchange reserves in the world, China's foreign exchange can not be used at home and can only be used to invest in the world. After the depreciation of foreign exchange, China will lose a lot of money, which is likely to affect the development of the domestic economy, so there are advantages and disadvantages to the appreciation of the renminbi. With the vigorous development of China's economy, this day will come sooner or later, but in general, the benefits are still greater than the disadvantages. Because if the renminbi can become the world's settlement currency, the benefits will be enough to offset these adverse effects, referring to the former US dollar.
(Text/Xi Le)