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Unformatted text preview: the same amount of their own currency. The demand of China’s products will decrease. Therefore, the rise of the Yuan could hurt many businesses that exports products in China. Allowing appreciation of the Yuan is a sensitive political decision. Chinese authorities give businesses more tools to guard against a possible rise in the value. China expands the use of the Yuan outside China for both trade and investment. Therefore, the supply of the Yuan in the international market increases, so the rise in value of the Yuan will slow down. However, when China allows more options for Yuan to be traded, foreign exchange trader can trade more with Yuan, and increase demand for the Yuan. Therefore, ultimately, these changes could make it easier for the government to allow Yuan to rise faster. China will issue its currency slowly so the supply will not increase dramatically to help the Yuan become more internationalized, but not depreciate....
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- Fall '07
- International Trade, Foreign exchange market, Yuan