Study On Influence Of RMB Depreciation Internal And Appreciation External On China’s Economic Development

Generally, there are two differing forms of a nation’s currency value, which consists of the internal value and the external value. More specifically, the internal value refers to the purchasing power of the currency in the domestic country, which is measured by the number of goods and services one could purchase per unit currency. Besides, the external value reflects the exchange ability of domestic currency to foreign currency, which is usually represented by the exchange rate. Under PPP, the external value of a currency could translate by the internal value at a specific exchange rate. Therefore, the internal and external value of a currency should keep consistent. At least, they are moving towards the same direction, which means both of them are appreciation or depreciation.However, when it comes to the internal and external value of RMB in recent years, finds that:RMB appreciation is seen in the foreign exchange market while RMB depreciation is exhibited in domestic currency market. This phenomenon is deviated from the traditional theory. Due to the internal and external value of RMB involves our big issue in economic development, such as the RMB exchange rate and domestic price stability; it’s caused widespread concern of scholars.For in-depth analysis of the negative effects of this phenomenon to our economy and how to avoid these effects, the article first expand the analysis of the causes, pointed out that economic growth, balance of payments surplus; the money supply and other factors that act directly on the RMB’s value changes, and the unbalanced economic system, unbalanced inside and outside economic development are the underlying causes of the RMB’s value changes. Upon completion of the reasons, the article analyzes the possible impact of this phenomenon on China’s economic development, and found that the phenomenon will limit the room for maneuver of monetary policy, deteriorate the export-oriented enterprise development environment, undermine China’s foreign investment attraction, and eventually affect the sustainability of China’s economic growth.For the negative impacts of this phenomenon, the article concludes with several recommendations, focus on industrial restructuring, expansion of RMB volatility aspects. At the end said:just take active measures will eventually achieve internal and external changes in the value of RMB trends consistency, weaken and ultimately eliminate the adverse effects on China’s economic development.