http://www.economist.com/news/finance-and-economics/21597965-why-chinas-central-bank-weakening-its-currency-one-way-no-more
China's currency is currently under a lot of discussion, due to the fact that many are upset about the "cheapness" of it. China's central bank has decided to weaken the yuan, and has now lost about 1% of its value. China still attracts more foreign investment than it can provide and has a large account surplus. However, now the value of the yuan is sliding. Will this be something that will persist in the future?
I wonder why the decided to decrease the value of the yuan, because it doesn't just effect China it effect the world as a whole. And if they were just doing it because of the problem with the foreign investment isn't there a different way to fix that problem? But i do think it could keep sliding because its not worth much anymore so people will start using alternative currencies.
ReplyDeleteI don't think that it will continue to decrease because that will not only ruin their economy but also ours. However, it would be a positive side effect on our part if we ever actually pay them back what we have borrowed, the cost will be less on our part considering the exchange rate will be so low.
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ReplyDeleteI agree with Alison. When China devalues their currency they are giving the US a great opportunity to repay its debt at a lower rate. When China devalues their currency they are also making their markets more competitive in the global market. I think will give China an advantage because they will see more influx of capital and trade.
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