The devaluation of Chinese Yuan
| Author : Date : 8/31/2015 3:37:49 PM |
The devaluation of Chinese Yuan
Between 1997 and 2005, the yuan had a fixed exchange rate set by the government, rather than a floating exchange rate
determined by supply and demand in the market. The China reformed its currency system. When pricing the yuan, China
now references a variety of foreigh currencies, including the US dollar, the euro, the Japanese yen, and the British poud.
The reform of the yuan exchange rate has made continuous progress since then. The latest move was the new pricing
system announced on Aug 11.
The devaluation is predicted to benefit China's economy. When the yuan devaluates, Chinese consumers will find that
their money can buy less in overseas markets. As a result, China will import less. On the other hand, Chinese products
will be cheaper in overseas markets, making it more appealing for other countries to import Chinese products.
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