What is the cashbackforexpipcalculator.com">cashback forex profit calculator rate adjustment mechanism The exchange rate adjustment mechanism refers to a countrys cashbackforexprofitcalculator of cashback forex imbalance, the imbalance between the supply and demand of forexcashbackprofitcalculator exchange is bound to produce pressure on the foreign exchange market, prompting changes in foreign exchange rates If the country is implementing a floating exchange rate system, the government allows the exchange rate to float freely, the spontaneous changes in the exchange rate can make the balance of payments automatically restore balance When a country has a balance of payments deficit, the foreign exchange market foreign exchange If the government does not use its reserves to intervene in the foreign exchange market, the foreign exchange rate will rise and the local currency exchange rate will fall, and the depreciation of the local currency will improve the countrys balance of payments and bring it into balance. The impact of the exchange rate adjustment mechanism on the trade balance is as follows: the countrys balance of payments surplus - appreciation of the local currency and depreciation of the foreign currency - increase in the foreign currency price of exports and decrease in the local currency price of imports - decrease in the countrys exports and increase in the countrys imports, thus restoring the countrys balance of payments. The countrys balance of payments is restored through an increase in imports and a decrease in exports and an increase in imports. The impact of the exchange rate adjustment mechanism on capital flows is as follows: the balance of payments surplus accompanying the capital inflow will lead to the appreciation of the local currency; when the latter is higher than the long-term equilibrium value, people expect that the local currency will depreciate; this expectation will lead to the capital outflow, which will restore the balance of payments. When the latter is lower than the long-term equilibrium value, people expect that the local currency will appreciate; this expectation will lead to capital inflows and restore the balance of payments. The exchange rate adjustment mechanism of the market is not a free lunch, it takes exchange rate fluctuations as a premise and requires countries to bear foreign exchange risks. balance of payments deficit but, in order to eliminate foreign exchange risk, foreign investors in foreign investment to buy spot foreign exchange, to sell forward foreign exchange so, capital outflows will cause spot exchange rates rise and forward exchange rates fall; they will make the local currency payoff of capital reduced, resulting in a reduction in capital outflows, or balance of payments deficit reduction Conversely, foreign investors to invest in their own country will bring a balance of payments surplus averse to foreign exchange risk of foreign Investors to invest in their own country, to sell spot foreign exchange and buy forward foreign exchange, causing the spot exchange rate to fall and the forward exchange rate to rise; they will make the foreign currency remuneration of capital reduced, leading to a reduction in capital outflows, or a reduction in the balance of payments surplus