Question by Design Chick: What does it indicate to subsidize exports by undervaluing currencies?
I have been reading through about a proposed US forex expenses that would impose added expenses on merchandise from nations around the world that are located to subsidize exports by undervaluing their currencies since they have “artificially reduced currencies”. I am puzzled as to how this operates, how we located out about it, and why it is a danger to the US and our economy……….Thanks!
Solution by John M
China has a lot of excess income that they are not shelling out in their economic system. They use this to purchase dollars on the forex markets. This can make pounds much less offered and maintains the yuan minimal relative to the greenback. This indicates they can compete considerably much more properly with american companies for american buyers on price.
Give your response to this question underneath!