| Revaluation of Yuan | | | 2/16/2011 | A mini case study | | Prepared by Angela AgostinacchioAmerican University of DubaiSpring : International Finance Management2011 | | | Revaluation of Yuan synopsis On 21st July 2005‚ Sun rose from the east with shocking news. China government and People’s Bank of China officially changed the value of their currency and thus removed its peg with US dollar. Prior to the revaluation‚ $1 U.S. dollar bought
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Mini-Case: The Revaluation of the Chinese Yuan 1. Many Chinese critics had urged China to revalue the yuan by 20% or more. What would the Chinese yuan’s value be in U.S. dollars if it had indeed been revalued by 20%? Answer: If the yuan had been revalued to Yuan 6.90/$‚ it would have constituted an increase in its value by 20% against the U.S. dollar: Yuan 8.28/$ − Yuan 6.90/$ × 100 = 20.0%. Yuan 6.90/$ 2. Do you believe that the revaluation of the Chinese yuan was politically or economically
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discusses the valuation of Chinese Yuan and the global economic balance with reference to the case “Chinese Yuan and Economic Balance” (Question 1). Secondly‚ it continues to focus on the situation of Japanese Yen‚ based on the article “The Yen and Exports: Japan’s Continued Recovery” (Question 2). Finally‚ it discusses three questions about foreign exchange calculations. (Question 3) Question 1 a) According to the article “Chinese Yuan and Economic Balance”‚ Chinese Yuan has been undervalued
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TO FLOAT OR NOT TO FLOAT Question 1: What are the implications of China’s exchange rate policy on doing business with and “against” China? Figure 1. China’s exchange rate in government manipulation and expectation 2004-2009 The fact that China made two renminbi (RMB‚ also called yuan) revaluation in 2005 and 2010‚ but in the limit of case study‚ we may just focus on the first one as shown in Fig. 1. On July 21‚ 2005‚ China announced a 2.1 percent appreciation of the RMB against the US dollar
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economies have been facing increasing competition from Chinese products. However if this exchange rate policy changes to a floating policy and the Yuan appreciates‚ the result will be increase in imports‚ as local products will be perceived as comparatively expensive‚ and a decrease of exports. As an overall effect surplus will start to decrease and may even become deficit depending on how drastic the appreciation will be‚ a stronger Yuan would also reduce economic growth and increase unemployment
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Case study 2 China’s managed float Summary During the year 1994‚ China pegged its currency‚ Yuan to US dollar at an exchange rate of $1=8.28 Yuan. The exchange rate policy was implemented to prevent balance of payment crisis and US is considered as one of the most influential currency in the global market. By this method‚ China gain rapid economic growth and foreign capital inflows. The stable and lesser risk have attracted many foreign company to invest in china as they can plan and make decision
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The song ”Float On” by Modest Mouse has changed how I feel about my surroundings. It made me realize that I am just one small part in a bigger world. The piece begins with the line‚ “I backed my car into a cop car the other day. Well he just drove off sometimes life’s okay”. This line uses the listener’s previous knowledge of how cops react to accidents to show how sometimes people can surprise you. When people do the unexpected they can change your life for the better. It’s actually my favorite
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currency‚ the yuan‚ to the U.S. dollar in 1994 because at that time the United States was the world ’s number economy and its currency is considered a highly reliable financial instrument. The benefits of pegging the value of the yuan against the dollar include more control in regulating money supply‚ and managing exchange rate. Costs include that higher chance of the economy blowing up in a costly currency collapse (Goldstein‚ 2002‚ p. 3)‚ an example of which is the managed float currencies during
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Managing China’s Float Why do you think the Chinese government originally pegged the value of the Yuan against the U.S. dollar? What were the benefits of doing this for China? What were the costs? Over the last decade‚ many foreign firms have invested in China and used their Chinese factories to produce goods for export. If the Yuan is allowed to float freely against the U.S. dollar on the foreign exchange markets and appreciates in value‚ how might this affect the fortunes of those
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| | |How Will the 2012 Election affect US-Chinese Relations? | |Policy Brief | |Lennox DeJonge | |11/21/2012 | US- CHINESE Relations and affect of the 2012 Election
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