Unformatted text preview: Therefore, China may want to peg their currency to the U.S Dollar simply to circumvent the disadvantages of flexible exchange rates. If the U.S and China use currency interventions such as reserves or if they try to control the flow of trade and finance directly, they may be able to maintain exchange rates. This in turn would mean that as the Dollar appreciates against other countries, so will the Chinese currency against other currencies. Therefore, other countries would have to pay or trade more for the same amount of Chinese (or American) exports....
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This note was uploaded on 03/26/2012 for the course ECON GM545 taught by Professor Gotches during the Summer '11 term at Keller Graduate School of Management.
- Summer '11