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THE STORY OF EXCHANGE RATE MOVEMENT BY CHINA AND ITS IMPACT ON USA ECONOMY

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Author(s): Muhammad Akram | Muhammad Ramzan | Sundus Naveed | Saira Hameed

Journal: Australian Journal of Business and Management Research
ISSN 1839-0846

Volume: 1;
Issue: 3;
Start page: 39;
Date: 2011;
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Keywords: US dollar | China | Yuan | Fixed Exchange Rate | Floating Exchange Rate | Trade Deficit

ABSTRACT
Exchange rate is an important element of the country’s economic health. It is one of the most scrutinized, anatomized and manipulated economic dimension. The purpose of this study is to examine the impact of exchange rate of China on the US trade, employment and on its currency as well. The approach to this paper is to answer the questions such as the mechanism selected by China for its exchange rate determination? What are the interests of China in adopting the fixed exchange rate strategy? How this step of China is affecting the U.S.? What steps are taken by USto abandon China’ policy? This paper concludes that US economy is badly affected; China snatches the jobs of US, exports of China rushes towards US economy while imports from US towards China did not come with that pace. This happens because of exchange rate and trade mechanism adopted by China. Moreover this policy of China is beneficial for its economy but not for the well being of the Chinese people. This paper is beneficial for the researchers, students, policy makers, politicians and economists related to international finance area.

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