Running head: TEST ASSIGNMENT 1

What should be the "true" exchange rate between the Chinese Yuan and the US Dollar? Explain

your arguments in a 300-word essay.

Student’s Name

Institutional Affiliation
TEST ASSIGNMENT 2

What should be the "true" exchange rate between the Chinese Yuan and the US Dollar? Explain

your arguments in a 300-word essay.

The exchange rate can be defined as the conversion rate between the US dollar and the

Yuan currency. For the past decade, China has been blamed for manipulating Yuan in order to

increase the number of their exports and boost their economic growth. China has always tried to

keep its currency below the market value, unlike other superpowers such as the UK, who has

always worked to keep its currency high and above the market value. To achieve this objective,

China, makes use of intervention buying and currency control mechanisms. The Chinese Yuan

has stayed in the range of 6.5 to 7 during the past 4 years and it has consistently increased by 0.1

compared to USD, since 2017.

It is difficult to dictate and control the true exchange rate of USD and Chinese Yuan

because the dollar index has decreased by 5% since December 2016 and this will continue to

decline as a result of the strategic and macroeconomic factors that are relied upon by the USA to

limit the strength of USD. Secondly, the consecutive changes in the RMB's strength are another

reason behind the increased value of the Yuan. Also, according to the strength of buying power

which changes according to the relationship between currency rates, the Chinese Yuan has more

value because of its increased exports as a result of its upper hand in IT technology, production,

and assembling.

Based on all the above facts, the assumption of China of considering Yuan as of high

value is basically an important method for achieving the long-term development plans of the

country. It is impossible to assign a true exchange rate between the USD and the Chinese Yuan

for all the reasons discussed above. Therefore, the conversion rate of the Chinese Yuan as
TEST ASSIGNMENT 3

compared to the USD cannot be relied upon for boosting the economic growth of the developing

nations.