The expected appreciation of the RMB will increase foreign debt borrowing; the depreciation of the RMB will lead to early repayment of debts. There are no relevant problems if the foreign debt is borrowed in RMB.

External debt refers to a country’s liabilities to foreign countries. According to the definitions of the International Monetary Fund and the World Bank, external debt “includes all liabilities owed to non-residents with repayment obligations in foreign currency or local currency as the unit of accounting.”

The method of repayment of foreign debt is not certain. It is generally the currency used when borrowing and the currency used when repaying. Settlement is an accounting term, and has two different meanings. Borrowing foreign debt requires registration with the State Administration of Foreign Exchange. Foreign exchange settlement and principal and interest repayment of foreign debt require approval from the State Administration of Foreign Exchange. The currency in which the loan is borrowed must be repaid in that currency.

Extended information:

The appreciation of the RMB is relative to other currencies, which means that the purchasing power of the RMB is enhanced. The reasons for the appreciation of the RMB come from the internal dynamics of China's economic system as well as external pressures. Internal influencing factors include the balance of payments, foreign exchange reserves, price levels and inflation, economic growth and interest rates.

In the most popular terms, the appreciation of the RMB means that the purchasing power of the RMB has increased. For example, in the international market (only in the international market can the increased purchasing power of the RMB be reflected). In the past, one RMB could only buy one unit of goods. After the RMB appreciates, it can buy more units of goods. The appreciation or depreciation of the RMB is caused by The exchange rate is intuitively reflected.

Baidu Encyclopedia-RMB Appreciation