Political Economy of Yuan-Dollar Exchange rate

In recent years, China's exchange rate policy has become the subject of discussion. Due to economic growth in the beginning of the 21st century, slowing job creation in the manufacturing industry, and the recent financial crisis in the United States, it attracts great attention in academic and policy fields. China has been criticized for adopting a new mercantilist policy to encourage exports and impede imports by manipulating the exchange rate between the RMB and the dollar.

RMB exchange rate against the US dollar has declined in recent months. The daily fixed interest rate (also called intermediate price) of the Chinese Yuan against the US dollar is depreciated from 3154 on November 2, 2015 to 5646 on January 7, 2016, and on January 29 to 5516 slightly It was raised. 33) According to the trend of the fixed exchange rate of 16 days, the US dollar against the spot exchange rate of the RMB declined from November 2015 to the beginning of January 2016, slightly rising from the beginning of January. On January 29, the US dollar against the RMB spot exchange rate ended at 5789, which is equivalent to 6% depreciation in 2097 the day before the exchange rate on August 10, 2015.

Before February 2014, China has strengthened the conversion of the yuan to the US dollar in response to the pressure of the United States. However, when the dollar rose 25% in 2014 and 2015, it reversed the situation and caused an asset bubble. Since the exchange rate of the yuan is fixed at the exchange rate of the US dollar, this growth has lowered the rise of the renminbi. China needs to lower the value of the yuan manually and maintain competitiveness with other emerging markets with free currency. China is very pleased that foreigners possess nearly one-fifth of US debt. Having US Treasury bills will help China's economic growth. It makes the renminbi weaker against the dollar. Therefore, China's exports are cheaper than American products. China's top priority is to create sufficient employment for 1.4 billion people.

On June 20, 2010, the People's Bank of China promised to increase the flexibility of the exchange rate of the Renminbi, and then set the exchange rate of the Renminbi to a higher level. The reference exchange rate for that day was $ 1.7980, up 0.43 percent from $ 6.8275 on June 21, the highest level since September 2008. The RMB rise will make China's exports more expensive, help modify the trade balance, and will bring some relief to foreign manufacturers trying to complete. Rising exchange rate of the yuan is disadvantageous for Soundtech Technology to raise foreign currency price and export products to foreign markets.