Question

Suppose that the United States felt very strongly that the Chinese were behind currency manipulation and as a result, accused them of this accusation. What could happen as a result to the Chinese currency?

Answer 1

If the United States felt very strongly that the Chinese were behind currency manipulation and as a result, accused them of this accusation, then the trust of the world's countries and investors on Chinese economy and on the stability of its currency would weaken dramatically. This would lead to a steep fall in the demand for Chinese currency and rise in demand for other safer currencies such as Euro and Dollar. So, the chinese currency would fall in value relative to other currencies and chinese goods would fall in value.