You know, to understand exchange rates, you really need to grasp one concept—foreign exchange, i.e. foreign money, is really just another commodity to be bought and sold. This is where the term "foreign exchange market" comes from. It's a market, so there must be those who want to buy the currency, and those who supply it. On the demand side, what reason (or reasons) could people possibly have to want to purchase foreign exchange?
Well, there are three major reasons really: First, people want foreign money for travel and tourism; second, foreign money is needed for trade to buy foreign goods and services; third, foreign money is needed for investment purposes, be it financial investment, like purchase of foreign denominated financial assets, or real investment, like building a new factory overseas.
A change in any of these three components will alter the demand for foreign exchange. For example, a lot of recent Hollywood blockbuster movies have been filmed in New Zealand. What if this creates a sudden surge in tourists going to New Zealand? These tourists will need New Zealand dollars, creating an increase in demand for that currency. Similarly, if U.S. companies decide they'd like to build factories in New Zealand (real investment), or purchase New Zealand dollar denominated financial assets (financial investment), the demand for the New Zealand dollar would increase.
任何一個在這三樣要素中的變動都會改變對外匯的需求。舉例來說，許多最近的好萊塢賣座電影是在紐西蘭拍攝的。假如這造成去紐西蘭的遊客數量激增會怎樣呢？這些遊客會需要紐幣，引起對那種貨幣需求的增加。相同地，假使美國公司決定他們要在紐西蘭建造工廠 (實質性投資)，或購買紐西蘭幣金融資產 (金融性投資)，那對紐幣的需求就會增加。
Now, let's go back to the idea of the foreign exchange market, with the New Zealand dollar being the foreign exchange. Initially, there is a certain supply of New Zealand dollars, and a certain demand. The equilibrium price in this market is called the exchange rate. Okay, now let's throw the increase in demand for the New Zealand dollar into the picture. What happens to the value of the New Zealand dollar as more tourists travel there, or as more U.S. companies invest?
As with any commodity, when the demand for the New Zealand dollar increases, its value increases. We see the exchange rate, in terms of the U.S. dollar per New Zealand dollar, increase. This is called an appreciation of the New Zealand dollar. When dealing with bilateral exchange rates like this one—that is to say, the relative value of two currencies—it is necessarily the case that this one currency becomes stronger or more valuable, relative to the other, (in this case, the New Zealand dollar is increasing in value relative to the U.S. dollar), the other currency is decreasing in value, or depreciating.
In this example, as the New Zealand dollar appreciates, the U.S. dollar is getting relatively weaker, or depreciating. Okay, so changes in demand for currency will affect the exchange rate. What about changes in supply?
Well, ultimately, who is it that controls the supply of foreign currency? The foreign government. If the U.S. wanted to drive the value of its own currency up, it would decrease the supply of dollars. If it wanted to drive the value down, it would increase the supply of dollars. Why would a country want to manipulate its own currency value?
Let me give you an example. Suppose you're a U.S. furniture producer, and government protection for the spotted owl means you can't get the lumber that you need domestically. So you call up a Canadian lumber mill, tell them you'd like to place an order, and they tell you that the lumber is going to cost 50,000 Canadian dollars. I don't know about you, but my bank account doesn't happen to have any Canadian dollars in it. This is where the exchange rate comes in. If I can figure out how much one Canadian dollar costs, then I can use that to calculate how much 50,000 Canadian dollars will cost.
The price of one Canadian dollar in terms of U.S. dollars is the exchange rate (dollars per Canadian dollar). I checked the dollar per Canadian dollar exchange rate for April 7, 2010 on x-rates.com, and found that Canadian dollar was equivalent to 0.998 U.S. dollars. Just as a side note, this nearly one-to-one parity between the two country's currencies is highly unusual. More on that in a minute.
一加幣按照美元來表示的價格就是匯率 (多少美元兌一加幣)。我在 x-rates.com 查了 2010 年 4 月 7 日美元兌一加幣的匯率，且發現加幣相等於 0.998 美元。只是附註一下，在這兩國的貨幣間幾乎一比一相等的匯率極度不尋常。等一下會再對那作更多說明。
So if one Canadian dollar costs 99.8 cents U.S. currency, how much will 50,000 Canadian dollars cost? In the end, it will cost you 49,900 U.S. dollars to purchase the Canadian lumber. Now let's take a little trip back in time, and figure out how much that same 50,000 Canadian dollars worth of lumber would have cost in April of each year for the previous 20 years. When would you most like to have purchased that lumber?
所以如果一加幣花費 99.8 分錢的美國貨幣，那五萬加幣會花多少錢？結果，買加拿大木材會花費你 49,900 美元。現在讓我們來一小趟時光回溯之旅，並弄清楚那同樣有五萬加幣價值的木材會在過去二十年中每年的四月花費多少錢。哪個時間點你會最可能購買那批木材？
You can see by looking at the data that when the foreign currency is the cheapest, (in this case, 2001, at 64 cents per Canadian dollar), the foreign imports are the cheapest—32,000 U.S. dollars. Even if the Canadian lumber mill sees the same 50,000 Canadian dollars every year, the price to the U.S. importer changes as the exchange rate changes.
你可以藉由觀察那資料看出何時外幣最便宜，(這個例子中，2001 年，在 64 分美元兌一加幣時)，此時外國進口最便宜－－32,000 美元。即使加拿大木材廠每年都看見相同的五萬加幣，對美國進口商的價格則會隨匯率變化而改變。
When the Canadian dollar depreciates, the lumber is cheaper, and U.S. importers will buy more lumber. On the flip side, as the Canadian dollar depreciates, the U.S. dollar is getting stronger relative to the Canadian dollar, or it's appreciating. While U.S. consumers are enjoying a strong dollar and buying lots of Canadian goods, Canadians are seeing the U.S. dollar, and therefore U.S. goods, as more expensive. Canadians import fewer U.S. products if the Canadian currency is weak.
A weak Canadian dollar is good for Canada's trade balance, as Canada's exports rise and imports fall. At the same time, the U.S. trade balance gets worse—we are importing more and exporting less. The effect of the currency value on the trade balance takes me back to the question—why would a country want to manipulate its own currency value?
You now know the answer to this: if a country can keep its currency cheap, then it keeps its products cheap, and foreign products expensive, both of which are good for the balance of trade. The U.S. has certainly been after China during the first decade of the 21st century. China keeps its currency value artificially low in order to keep favorable trade balance.
你現在知道這個問題的答案：如果一個國家可以維持它的貨幣便宜的話，那麼它就能維持它的產品價格低廉，而外國產品昂貴，兩者都對貿易平衡有好處。美國當然在 21 世紀首個十年間追在中國後。中國將其幣值維持在刻意低迷的情況，以保持有利的貿易平衡狀態。
Next time: Comparative Advantage and Trade.
- 「訂購」- Place An Order
So you call up a Canadian lumber mill, tell them you'd like to place an order...
- 「另一方面、反而言之」- On The Flip Side
On the flip side, as the Canadian dollar depreciates, the U.S. dollar is getting stronger relative to the Canadian dollar, or it's appreciating.