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China is still almost entirely pegged to the US Dollar, as shown by the exchange rate of the Yuan and other currencies to the US dollar. If China had, in fact, changed its peg to other currencies, the relationship between the Yuan and the US dollar couldn't be a flat as it is. It wouldn't make much sense for an exporting nation like China to peg to any other major currency either, given those currencies' appreciation. As the Euro and other currencies appreciate in relation to the US dollar, China's exports become even more affordable to people in those areas, allowing exports to increase.  

This kind of dynamic helps to keep US dollars in use for international trade even as merchants complain about how US dollar devaluation affects their ability to buy high-quality, non-American things that they want.


by santiago on Fri Nov 6th, 2009 at 10:30:38 AM EST
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