ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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International monetary credits
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Dollars
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Yuan
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Euros
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Detailed explanation-1: -Answer» C. yuan, the Chinese currency.
Detailed explanation-2: -China has a policy of pegging its currency (the yuan) to the U.S. dollar. If the yuan is undervalued against the dollar, there are likely to be both benefits and costs to the U.S. economy. It would mean that imported Chinese goods are cheaper than they would be if the yuan were market determined.
Detailed explanation-3: -Pegging the yuan is a strategic policy move that provides crucial benefits to the Chinese economy. Using this approach, the People’s Bank of China increases the appeal of Chinese exports on the global marketplace and helps fuel greater prosperity for China.
Detailed explanation-4: -The exchange rate policy refers to the manner in which a country manages its currency in respect to foreign currencies and the foreign exchange market. The exchange rate is the rate at which the domestic currency can be converted into a foreign currency.