How the Strong USD Affects China’s Inflation
Develop a theme with a clearly stated objective for your discussion. Support your project with market facts and data, and arrive at a conclusion that makes logical sense. Your topic must have an international component and a financial component, and must include data, and/or graphs to support your research. You must also include a minimum of two unique sources as a reference to support your project.
Main Topic (20 Points)
Is it practical and rational?
Is your project credible and realistic?
Does the approach make sense?
Are there any facts or statements not backed by research?
Contrasting points (5 points)
Please develop or mention several (2+) contrasting points of view
What is a counterpoint to your main discussion point?
Report Accuracy (10 points)
Does the report have any numerical or grammar errors?
Are they any factual mistakes?
Is the data and other facts used cited correctly?
Are the citations listed accurately?
Does it cover a topic related to international finance?
Project Specifics (10 points)
Utilize data and graphics within or as a supplement your presentation
(market data, payoff diagrams, etc)
How the Strong USD Affects China’s Inflation
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Introduction
The United States of America has always maintained a string economy for many decades and therefore it has the most dominant currency in the world. The world’s most used currency is also the world’s most reserved currency, meaning that central banks globally have large quantities of this currency at their disposal. When the USD strengthens, it often leads to depreciation in other countries. At the moment, Chinese Yuan has the fifth best average daily foreign exchange turnover as seen in the table below. This paper will discuss how the changes in the value of the USD strongly affect inflation rates in China.
Eun IFM PPT CH05.
Reasons
The value of USD affects import costs in China. The US dollar still dominates world reserves with 61.82% and the Chinese Yuan has 1.95% (Eun IFM PPT CH03). China is a major importer of goods and raw materials hence, as the Yuan weakens, the cost of imports ultimately rises substantially. Yang (2023) reported that the dollar index had risen to 0.301% in one month in China and this has halted many business activities. A large private developer like Country Garden had to delay its payments and Zhongrong International Trust Co. also had to renegotiate overseas payments for two companies (Lang, 2023). Commodities like oil and metals are commonly denominated in the USD hence, a strengthening USD correlated to a reduction
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