Question

Donald Trump official labeled China a "currency manipulator" in August 2019 (see the attached article from the New York Times). Based on what we have discussed with regard to the determination of exchange rates, what impact did this likely have in the market for Chinese Yuan (renmimbi)? Do you believe that these threats are effective at achieving the goal of a stronger Yuan? Explain.

Answer 1

Currency manipulation:it is type of unfair currencies practices to gain advantages in world Trade. China always try to undervalued it's yuan then dollar that why their export become more advantageous and import become expensive, which promote more and more export and demote important. Thus china buy dollar through different mean to undervalued it's currency fir benefitting from international trade .

This is not a good practice at all and this make bad reputation of renmimbi as currency of basket of imf. In long run this may be harmful as neighborhood countries are unhappy with china this corrupt practices as this reduce competition of trade as china gets unfair advantage.