An exchange rate is the price of one currency in terms of another. How it is determined is the exchange rate game，and there are numerous aspects to this contest of chance，willpower and economic clout. Different factors produce different outcomes. Different vantage points produce different conclusions.

If we take the renminbi，for example，what does the game consist of and who are the key players?

Firstly，there is the contest over renminbi appreciation and depreciation. Appreciation favors creditors while depreciation favors borrowers. In international trade，appreciation boosts imports and curbs exports，while depreciation curbs imports and spurs exports. We should not make a simple value judgment about the value of the currency without considering a wide range of factors such as the effects on importers and exporters，the impact on the balance of payments and the effects on the economy overall.

Secondly，there is the contest of the renminbi and the US dollar. The United States and China are the world¡¯s largest and second largest economies，and the exchange rate between the two currencies is an indicator of purchasing power. Interestingly，the two economies have economic cycles that do not coincide，and domestic economic conditions are hardly the same. Judging the advantages and disadvantages of appreciation versus depreciation is a complex calculation.