Exchange Rates between the USD and the CNY Analytical Essay
Exchange Rates between the USD and the CNY
Argues that China has done more harm than good by maintaining its exchange rate between the USD and the CNY lower than what they should be.
# 152073 | 2,035 words | 11 sources | APA | 2012 |
Published on Nov 30, 2012 in Economics (Econometrics) , Political Science (Fiscal Policy (economy)) , International Relations (General)
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This paper explains that China follows a policy of managed exchange rates between the USD and the CNY in which their exchange rate of the Chinese Yuan is not allowed to fluctuate according to the forces of demand and supply because the Chinese government intervenes to set whatever rate it desires. Next, the author reviews arguments by many experts that, if the Chinese government allows the currency market and forces of demand and supply to control the market, the USD/CNY exchange rate will be much higher. The paper bases this analysis on the economic theory of fixed exchange rates. Eight color figures are included in the paper.
Table of Contents:
The J Curve Effect
Table of Contents:
The J Curve Effect
From the Paper:"All of these factors were not only a concern for the United States of America, but they were a concern for the global economic system. As a result, China was pressurized to abolish its practices of manipulating its leveraged position in the currency market. Several bills were passed in the US congress against the China's stance of manipulating the exchange rate market constantly. These bills talked about reducing the unfair imbalance in international trade through unfair practices and forced China to abolish its system of managed exchange rate. Among these bills, these common ones were S.1619, S.1130, and HR.639/S. 328. Even President Obama stated that making China address its currency policy will be his top priority. Obama tried to address the issue by making two forums. The purpose of these forums was to force China to adopt market based foreign exchange system. These forums were S&ED and JCCT.
"As a result of all these reforms and actions taken by the US officials and multilateral trade organizations, the Chinese government allowed its exchange rate to fluctuate and the USD/CNY exchange rate fell from somewhere in the mid 8s to 6.29. It was done to protect the future of the USA and the future of global economic system."
Sample of Sources Used:
- Forecasts.org (2012) Chinese Yuan to U.S. Dollar Currency Exchange Rate Forecast. [online] Available at: http://www.forecasts.org/yuan.htm [Accessed: 28 Mar 2012].
- Google.com (2012) US Dollar: CURRENCY:USD quotes & news - Google Finance. [online] Available at: http://www.google.com/finance?q=USDCNY [Accessed: 31 Mar 2012].
- Lipsey, R. and Chrystal, A. (2004) Economics. 3rd ed. Oxford: OUP, p.233-240.
- Morrison, W. and Labonte, M. (2012) China's Currency Policy: An Analysis of the Economic Issues . [online] Available at: http://www.fas.org/sgp/crs/row/RS21625.pdf.
- Online.wsj.com (2012) Beijing Hints Yuan Has Room to Rise - WSJ.com. [online] Available at: http://online.wsj.com/article/SB10001424052702304450004577276410346641148.html [Accessed: 28 Mar 2012].
Cite this Analytical Essay:
Exchange Rates between the USD and the CNY (2012, November 30) Retrieved March 25, 2023, from https://www.academon.com/analytical-essay/exchange-rates-between-the-usd-and-the-cny-152073/
"Exchange Rates between the USD and the CNY" 30 November 2012. Web. 25 March. 2023. <https://www.academon.com/analytical-essay/exchange-rates-between-the-usd-and-the-cny-152073/>