But stronger currency could increase the price of Chinese export goods and would hurt a Chinese exporter in the future.In fact, China tries to keep it's currency stable not to be revalue, which should make the market imperfect comparing with it's growth, that's the reason why the United State thought that the stable of Chinese currency is not reasonable and should be revalue at this point.While the economic of China keep growing but the currency remains unmove, that keep the price of goods exports from China remain at the low price and still maintain it's export volume to foreign importer, especially the United State which is the big market of China, That's why the US keep trying to make the Chinese currency to be revalue.
One of the strategy to resolve this problem,Is if the US try to increase the liquidity of US dollar in the international market in order to keep the pressure of the foreign exchange of US dollar against other major currency(e.g Renminbi,Yen,Euro etc.),that could make the US dollar to become more weaker.The strtegy is called Quantitative Easing (QE2) that just recently issued by the federal reserve of the United State.
References:
Professional from Banking Institution
Http://www.imf.org/external/pubs/ft/issues8/index.htm
Http://www.allvoices.com/contributed-news/7246987-china-and-us-quantitative-easing-2
Further Question
Would the Renminbi be devalue against US Dollar in the future?
Would the Renminbi be devalue against US Dollar in the future?
Nice explanation, some grammar problems but good sources. 9.5/10
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