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Jiaoting Lu Tian Jiang Leyi Wen

Chinese Currency Devaluation. Jiaoting Lu Tian Jiang Leyi Wen. Background. Since 2015, China has pursued a monetary policy of aggressive easing, with the goal of weakening the yuan against international currencies like the U.S. dollar.

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Jiaoting Lu Tian Jiang Leyi Wen

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  1. Chinese Currency Devaluation Jiaoting Lu Tian Jiang Leyi Wen

  2. Background Since 2015, China has pursued a monetary policy of aggressive easing, with the goal of weakening the yuan against international currencies like the U.S. dollar. The People's Bank of China allowed the yuan to depreciate by nearly 2% against the U.S. dollar in 2015. In 2016, the Chinese yuan still continues to depreciate.

  3. 1. Give More Power to the Free Market.2. Make Exports More Competitive. 3. Significant Reliance on Investment Reasons

  4. Impacts Impact On Global Trade Market Given that China is the world’s largest exporter and its second-largest economy, any change that such a large entity makes to the macroeconomic landscape will have serious repercussions With Chinese goods becoming cheaper, many small- to medium-sized export-driven economies may see their trade revenues reduced. And if these nations are debt-ridden and have a heavy dependence on exports, their economies could take a beating.

  5. Impact On Global Economy In a bid to establish the yuan as an international currency, China has been liberalizing its currency system. In December 2015, China succeeded in getting the renminbi included as the fifth currency in the IMF’s Special Drawing Rights (SDR) basket, which will be effective from October 2016. With the renminbi recognized as an international reserve currency, its valuations could have major effects on holders, including nations and large organizations. The rate of borrowing funds from the IMF depends on the interest rate of the SDR, which will now include a Chinese instrument.

  6. Discussion What are your thoughts regarding the impacts on the U.S. because of the Chinese Yuan devaluation? Do you think the Chinese Yuan will continue to depreciate? Why?

  7. Sources http://www.marketwatch.com/story/china-will-let-yuan-weaken-further-as-dollar-rises-analysts-say-2016-08-11 http://www.chinausfocus.com/finance-economy/will-the-renminbi-devalue/ http://etfdb.com/yuan-devaluation/reasons-for-yuan-devaluation/ http://www.investopedia.com/articles/investing/012516/chinese-currency-devaluation-hits-global-economy.asp http://www.businessinsider.com/yuan-dollar-conflict-2010-4

  8. Thank you !

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