US Dollar and Chinese Yuan Policy

Money & Capital Market
Topic: US Dollar and Chinese Yuan Policy
Premise: The regular Chinese government intervention on the valuation of the Chinese Yuan is the premise of the research on its impact on global trade and the U.S dollar value. China has direct effect on the U.S dollar through the loose pegging of the value of the yuan to the U.S. The exchange rate implies that the Chinese central bank maintains the value of Yuan close to the quoted value. Currently, the U.S and other countries are using the floating exchange rate to show the changes in the value of U.S dollar to the Chinese Yuan (Agya, & Jun, 2015). The U.S dollar value is determined by the global forces of demand and supply in the trade activities. At certain times, the value of Yuan tends to move one way by increases in the expectations have challenges on the regulators to liberalize the Chinese foreign exchange market without interfering with capital movements.
Approach: The research study will focus on critical analysis and review of the exchange rate between the U.S dollar and Chinese Yuan. It would review the nature of the U.S dollar the key trade and government policies that impacts its value in comparison with the Chinese Yuan. The Chinese government is heavily involved in determining the value of the Yuan. However, the government intervention raises concerns over the market liberalization process in China (Demir, & Wu, 2017). The fixed exchange rate of the Chinese Yuan implemented makes it difficult for the value of Yuan to respond well to the changes in the trade output and changes in the value of the U.S dollar. For example, recently, the Chinese government devalued the Chinese Yuan to grow their trade exports to other countries. The research would seek to understand how the interference with the Chinese Yuan valuation impacts on the U.S dollar based on the prevailing exchange rates in the market
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