A Study on the Causes of Two-Way Exchange Rate Fluctuations, Their Economic Effects, and Multi-Dimensional Response Strategies

Abstract

Given the current economic situation, this paper will investigate the reasons for exchange rate changes by examining factors such as inflation and deflation, the country's domestic economic environment, market speculation, etc. It will analyze the positive and negative effects of both currency appreciation and depreciation, explain how changes in the exchange rate affect countries, enterprises and individuals, the scale of national import and export trade, operating costs of foreign-trade enterprises, and household asset investments. Given the risks and development opportunities arising from exchange rate changes, this paper will examine how countries, enterprises and individuals should deal with the economic impact of exchange rate fluctuations from the perspectives of national policy regulation, corporate operational adjustment and household asset allocation, in order to reduce the shock of exchange rate volatility and utilize the development advantages of such fluctuations.