Tomas Hult, Byington Endowed Chair and Professor of International Business at Michigan State University, is the author of the attached article, which was originally published in The Conversation.
News that the People’s Bank of China, the country’s central bank, changed its formula for calculating the reference rate of the yuan (RMB) prompted the currency to fall to a four-year low.
Essentially, the People’s Bank of China is now calculating the reference rate on a daily basis and incorporating market forces. Some financial experts argue that allowing market forces to help determine the value of the yuan is logical, while others assert that China is merely trying to boost its own exporters – at the expense of foreign companies – by making their products relatively cheaper in the global marketplace. Many in the U.S. are concerned that our businesses will be hurt, with some accusing China of currency manipulation.
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