Already the Chinese currency has appreciated remarkably against the dollar. In 2006, the exchange rate was 8 Chinese yuan for one dollar. Now it’s (down to) 6. That’s a decline of 25% in the dollar (vs the yuan) in (just) 7 years. Now, this is during the period that the Chinese are buying dollars to support the dollar’s value.
And now they’ve announced they (China) are not going to do that anymore (support the dollar). So, what then happens to the appreciation of the Chinese currency if they simply no longer hold their own currency down by using it to purchase dollars in order to keep the dollar up? What happens when they stop that?
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