Analysis of Economic Indicators(6)——Foreign trade balance figures（TB）

(one)The Meaning of Foreign Trade Balance Numbers

Foreign trade balance figures(Trade Balance Figure)It reflects the trade status of goods between countries and is an important indicator for judging the macroeconomic operation. It is alsoforeign exchangeOne of the important indicators for basic analysis of transactions. If a country's total imports exceed its exports, there will be a "trade deficit" situation; If exports exceed imports, it is called a "trade surplus"; If exports equal imports, it is called "trade balance". The US trade figures are released once a month, and the figures from last month are released at the end of each month. China also needs to release import and export figures at least quarterly.

　　(two)How to interpret this indicator

If a country frequently experiences a trade deficit, its national income will flow out of the country, weakening its economic performance. If the government wants to improve this situation, it must devalue the country's currency, because a decrease in currency value, that is, a disguised reduction in the price of exported goods, can enhance the competitiveness of exported products. Therefore, when the country's foreign trade deficit expands, it will weaken the country's currency and cause it to decline; On the contrary, when there is a foreign trade surplus, it is beneficial for that currency. Therefore, the international trade situation is a very important factor affecting foreign exchange rates. The trade friction between Japan and the United States fully demonstrates this point. The United States has experienced consecutive trade deficits with Japan, leading to a deterioration in its trade balance. In order to limit Japan's trade surplus with the United States, the US government exerted pressure on Japan to force the yen to appreciate. The Japanese government, on the other hand, is doing everything possible to prevent the yen from appreciating too quickly in order to maintain a more favorable trade situation.

From the impact of a country's foreign trade situation on its exchange rate, it can be seen that the balance of payments directly affects the changes in a country's exchange rate. If a country experiences a surplus in its international balance of payments, the demand for its currency will increase, and the amount of foreign exchange flowing into the country will increase, leading to an increase in the country's currency exchange rate. On the contrary, if a country experiences a balance of payments deficit, the demand for its currency will decrease, and the amount of foreign exchange flowing into the country will decrease, resulting in a decrease in the exchange rate of the country's currency and a depreciation of the country's currency. Specifically, among the various items of the international balance of payments, besides the trade items mentioned above, there is also the capital account that has the greatest impact on exchange rate fluctuations. The trade surplus or deficit directly affects the rise or fall of the currency exchange rate. For example, an important reason for the decline in the US dollar exchange rate is the increasing trade deficit in the United States. On the contrary, due to Japan's huge trade surplus and good international balance of payments, the foreign exchange rate of the Japanese yen is showing a continuous upward trend. Similarly, the surplus or deficit in the capital account directly affects the rise and fall of the currency exchange rate. When a country has a large deficit in the capital account and other items of the international balance of payments are insufficient to make up for it, the country's international balance of payments will experience a deficit, leading to a decline in the foreign exchange rate of its own currency. On the contrary, it will cause an increase in the exchange rate of the domestic currency.
　

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