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Reason and Impact of Increase in Chinese Yuan Value of China

In: Business and Management

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USE CURRENCY POLICY TO RESTRAIN INFLATION IN VIETNAM UNDER THEORY OF IMPOSSIBLE THREES
USE CURRENCY POLICY TO RESTRAIN INFLATION IN VIETNAM UNDER THEORY OF IMPOSSIBLE THREES
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VOL 108
05/2011
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VOL 108
05/2011
MAGAZINE ON BANKING SCIENCE AND TRAINING
MAGAZINE ON BANKING SCIENCE AND TRAINING

INTERNATIONAL EXPERIENCE AND PRACTICE | REASON AND IMPACT OF INCREASE IN CHINESE YUAN VALUE OF CHINA NGUYEN XUAN HONGBanking Academy | | After much pressure on Chinese Yuan (CNY), China made decision on increase in their currency in 6/2010. How will this increase impact on relevant objects? This article aims to find reason and impacte of increase CNY value of Chine on Chinese economy and other countries, including Vietnam | be carefull on exchange rate policy to avoid impact on export. According to economic researcher , adjustment on CNY value may cause instability in Chinese economy due to encouraging investment, increasing independence of economy on external factor, especially when 50% of export comes from foreign-invested enterprises in current. This is contradiction that shall be considered when selecting exchange rate. | 1. CNY exchage rate development before and after increaseValue from 2005 to the date before 21/06/2010: CNY value increased due to application of margin transaction measure, holding CNY to USD rate at CNY=6.83 from 8/2007 | Besides achievement of economic growth, which partly thanks to current exchange rate policy, China also has to deal with many challenges. Since 1998, China has spent 200 billion USD to refinance and buy doubtful debts of banks. China is dealing with instable finance but Chinese Government still | |

Source: Reuters
Source: Reuters
Source: Reuters
Source: Reuters
Figure 1. USD/CNY exchange fluctuation from June to…...

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