China’s Exchange Rate Policy (VIDEO)
The Fletcher School, Tufts University and The Brookings Institution
This conversation was recorded on December 13, 2018.
China has been moving from an exchange rate regime in which the yuan was pegged to the U.S. dollar to one in which the relationship between the two currencies is somewhat looser. But the path to this transformation has been bumpy. The difficulties illustrate the challenges China faces in the process for determining the value for its currency.
What this Means:
A relatively stable and predictable exchange rate between the yuan and the dollar facilitates trade and investment decisions for businesses in China and the United States. But staying too close to the dollar can be a problem for China with respect to its other major trading partners in East Asia, Europe and elsewhere.