The Chinese Yuan is not convertible to American dollars

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1. 1. The Chinese Yuan is not convertible to American dollars. This restricts Chinese investors from exchanging their Yuan for dollars to invest abroad. The rate of exchange is currently 8.28 Yuan to 1 dollar. In this framework, answer the following questions:

 

1. 1. • What are currency exchange controls?

 

1. 1. • Why are these controls imposed?

 

1. 1. • What impact do these controls have on Yuan to dollar exchange rates?

 

1. Read the section in the article titled Balance of Payments. How can basic hedging techniques be applied to China?

write a report of findings of three pages as a Microsoft Word document, double-spaced, in Arial 12 pt font. Your report should be your own—original and free from plagiarism.

 

 

Assignment 2: Bank of China ( due Saturday, Sep 29)

Bank of China has opened trading in the Chinese currency on the international financial markets. Is this good or bad for China? Is this good or bad for the U.S.? What will be the effect on the U.S. dollar and European Euro as reserve currencies?

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