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China's currency turmoil

China's currency turmoil. By: Elizabeth Thompson & miriam schroeder. Background. China’s economy, the world’s second largest after the U.S.,

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China's currency turmoil

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  1. China's currency turmoil By: Elizabeth Thompson & miriam schroeder

  2. Background • China’s economy, the world’s second largest after the U.S., • Unlike most countries that allow the value of their currency to be determined in world markets, China’s government uses the U.S. dollar as a benchmark against which they manage their currency’s value. • The currency abbreviation for the China yuan renminbi (CNY), the general term for the currency of the People's Republic of China (PRC). • The renminbi (or yuan) is made up of 10 jiao and 100 fen and is often either abbreviated as RMB, or presented with the symbol ¥

  3. Recently... • People's Bank of China has attempted to guide the yuan lower against the U.S. dollar • Yuan is down 6% against the US Dollar from a year ago • Stock markets are on a rollercoaster

  4. China's firms expanding • Chinese firms have announced plans to purchase 66 foreign companies, worth $68 billion • Chinese CEOs want to make global purchases before the Yuan loses anymore value Top four China overseas deals announced so far in 2016: 1. ChemChina offered $43 billion for Swiss chemicals firm Syngenta 2. Haier made a $5.4 billion bid for GE's appliances unit 3. Zoomlion Heavy announceed $4.87 billion offer for equipment manufacturer Terex Corp. 4. Dalian Wanda made a $3.5 billion bid for Hollywood studio Legendary Entertainment (China is Buying Foreign Firms at a Record Rate)

  5. Chinese trade By bringing down their currency China thinks to gain a huge advantage in global trade; which makes their exports cheaper and more attractive to foreign buyers • China's competitor's are likely to follow in same pursuit

  6. Analysis Some analysts say that instead of defending the yuan at huge cost, the central bank should accelerate reforms to liberalize the currency • Some experts argue they are allowing market forces to have greater control of the Yuan Do you think China is creating a currency war with its trade partners? What kind of effects will the Chinese firms purchasing companies worldwide have? Positive/Negative?

  7. http://money.cnn.com/2016/01/07/news/economy/global-currency-war-sparked-by-china/index.html?iid=ELhttp://money.cnn.com/2016/01/07/news/economy/global-currency-war-sparked-by-china/index.html?iid=EL http://money.cnn.com/2016/01/08/investing/china-yuan-currency-dilemma/index.html?iid=EL http://www.pbs.org/newshour/making-sense/whats-happening-chinas-currency/

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