Abstract

This caselet discusses the impact of the Yuan’s peg against the US dollar on global trade. It specifically focuses on the growing pressure on China to revaluate its currency and describes the reasons for the delay in revaluation. The caselet looks at China’s plans with regard to changing its foreign exchange rate system.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Is China getting an unfair trade advantage as alleged by other nations?
• Yuan’s peg against the US dollar
• Why other countries are putting pressure on China to revalue its currency against the US dollar
• China’s concerns with regard to revaluation of renminbi
• and Speculation regarding foreign exchange rate reforms in China.

Keywords

Chinese currency, Yuan, renminbi, revaluation, European Union, G7 countries, Bretton Woods Accord, European Joint Float (EJF), European Monetary System (EMS), World Bank, float exchange rate system, Olympic Games, World War II, pound, counterfeit