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China's Managed Float

China's Managed Float Read the case and answer the questions at the end of the case.
Use one outside reference in APA style.


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1. I think that the Chinese government originally pegged the Yuen against the US dollar due to the fact that this was a methodology by which to increase the value of the Yuen internationally. One of the tremendous benefits of this methodology was that the value of Chinese currency rose in tandem and in direct correlation with the rise in the value of the US dollar against other foreign currencies. A major cost of this policy that eventually started to affect China is the fact that the tremendous purchase of US dollars within that country in order to maintain the balance in relation between the exchange rate between the US dollar and the Chinese Yuen, caused there to be an overflow of financial capital within the nation. In addition, the tremendous amount of lending that the country is going in order to rid itself of this overflow of money seems to be leading to inflation and an eventual destabilization of the country's economy.

2. If the Yuen ...