USA accused China that the currency devaluation so that to promote export explain how it can help to export
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As currency value decreases purchase power also decreases.
That is a single unit of currency can buy a little product than it does before.
As a result, Imports become costly. And Imports depreciates.
On the flip side, as value of Yuan (chinese currency) decreased againist US dollars, they will find exports from China cheaper. There is thus a increased competition and quality in exports.
Although this can be an attractive option in short time in a regulated economy, measured should be taken to boost value after a fixed period. Otherwise it would lead to cost-push inflation. And if China concentrates on incresing demands of any one sector it would even lead to Dutch disease.
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