China Exerts Unprecedented Control Over US Dollar

China Exerts Unprecedented Control Over US Dollar

Sometimes the term “currency war” can be confusing, and the actual event even more so, although it’s not really all that difficult to understand. National currencies are traded on international markets, and this is what sets exchange rates, for example how many Japanese yen it takes to buy one US dollar. As the exchange rates vary, the relative costs of good and services traded among countries changes as well.

A currency war occurs when countries keep acting to devalue their currencies in the hope of stimulating their economies by making their exports cheaper for foreigners to buy.  They rarely end well.

China has looked to take down the US dollar for some time.  More on this on page two.

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