Is the Chinese Renminbi Undervalued Essay Example for Free

Is the Chinese Renminbi Undervalued Essay Since July 2005, first time being revalued after 11 years of fixing at 8.27, Chinese Yuan has been heading towards only one direction – all the way from 8.27 to 6.27. Although Yuan is a highly regulated currency by government, Chinese officials could no longer peg the Yuan as it used to be in a closed economy because WTO had opened up doors for Chinese manufacturers in 2001 to export cheap goods and services to developed countries. With trillions of foreign capital flooding into the country, Yuan has appreciated over 30% over seven years. However, this one-way money flow cannot be sustained. Though it is not sure whether Yuan is at the absolute equilibrium, it is currently neither significantly undervalued nor overvalued. This essay is going to explain why Yuan is modestly priced with analysis in both the fundamentals and money flows. Needs for appreciation in past In theory, two open economies should have equivalent purchasing power – that is, if 10 units of foreign currency can buy something that is valued at 1 unit of domestic currency, the implied equilibrium exchange rate should also be 10(domestic as based money). Otherwise, there is an arbitrage opportunity. We call this Purchase Power Parity. In reality, despite some limitations about this theory, it explains most of the valuation problem in China. Take a look at China’s Balance of Payments over 2003-2010 and it is obvious to observe huge surplus annually in both current and capital financial account, accumulating to a foreign reserve of $3.3 trillion. Reach equilibrium? At the government level, on one hand, it had to increase money base to maintain exchange rate against USD at a gradual appreciation pace. On the other hand, it needs to hold huge foreign assets, primarily in USD, to back up its currency from deprecation in the event of capital outflows. Amid the money inflow, Chinese central bank faced mounting pressure of inflation on local assets. The private sectors are impacted in two ways. Firstly, Chinese residents and companies feel much richer now because higher RMB increases their purchase power of foreign assets. This means more imports and capital account outflows. Secondly, inflation and appreciation means that Chinese products and services are more expensive. And this would lead to less exports. Pew Survey showed that 70% of Chinese people feel financially better off than five years ago, which among the best in the world. In the last a few years, the fact of continues Yuan appreciation, associated with stories about how China is cash rich and how Chinese investors are buying everything they can in the world, raises interesting discussion if Yuan had appreciated enough. There is also a trend that more goods are manufactured in new WTO members such as Nepal and Vietnam that have price advantage over China. Moreover, in the currency forward market, investors have priced in modest depreciation for Yuan in the next 12 months and spot market is no longer moving towards one direction. Data shows†¦ All those various observations reveal the same process that drives RMB exchange rate to an equilibrium level. Recent data also suggests that at current FX level, the rise in trade surplus and capital finance account surplus slowed (see chart below). So does foreign reserve. What does it means? If we apply a popular formula: Capital out flow = Foreign Reserve – FDI – Trade surplus Numbers imply that 62.4 – 128.5 – 145.8 = 211.9 billions has flown out of China in the first three quarters of 2012. Although this estimation still lacks of actual evidence, the scale of growth slowing down in foreign reserve in 2012 is worth attention since it is so large that it is hard to be justified by seasonal adjustment or calculation period discrepancy. This might signal the start of reverse capital flows of Yuan, which means Yuan is no longer undervalued. Ultimately†¦ The answer to Yuan’s valuation problem is complex especially given that it is still mostly controlled by government and there are so many dynamic factors to consider. So far there are some money flows and data support the conclusion that Yuan is no longer significantly undervalued. In the long run, as expectation of Chinese government to allow a fully conversion Yuan is built on, maybe the real answer can only be found out by then.

Vertebrate Adaptions for Terrestrial Life Essay -- AP-Biology Biology

Vertebrate Adaptions For Terrestrial Life AP-Biology Essay on vertebrate structural adaptations for terrestrial life.   Ã‚  Ã‚  Ã‚  Ã‚  The problems of survival of animals on land are very different from those of survival of animals in aquatic environment. Describe four problems associated with animal survival in terrestrial environments but not in aquatic environments. For each problem, explain a physiological of structural solution.   Ã‚  Ã‚  Ã‚  Ã‚  Four problems faced by animals on land are breathing (respiration), water conservation in excretions, successful reproduction, and the producing an egg which can survive outside of the water.   Ã‚  Ã‚  Ã‚  Ã‚  All animals need to respire, but I have no idea why. Maybe you would like to answer that? Aquatic animals use gills, which are outgrowths from the body which increase surface area over which gas exchange can occur. Inside the gills of aquatic animals, the circulatory system removes oxygen, and delivers waste carbon dioxide. Land vertebrates have developed a different approach to the problem of gas exchange, as water is not present in all of the terrestrial environment. Terrestrial vertebrates have developed lungs to solve this problem. Air enters through the nasal passages, or the mouth, passes through the trachea, then branches off at the two bronchi, and goes through many branching passages called bronchioles, which end in alveoli. Alveoli are sack-like structures where the circulatory system meets the respiratory system.   Ã‚  Ã‚  Ã‚  Ã‚  S...

High School and Everyday Pressures Essay

The topic sentence of the paragraph Is, a trip to the ocean can be a relaxing escape from everyday pressures of life. b. What sentence is unrelated to the topic and can be eliminated? The sentence that is unrelated to the topic is, you should always be careful to avoid overexposure to the sun at the beach. 2. List four things to look for when you’re proofreading. Four things you should look for while proofreading are, grammar, spelling, correct punctuation, and proper capitalization. 3. Complete the following two steps: a. Define the term cliche. The term cliche is a word, phrase, or idea that is over used. b. Write one sentence that contains a cliche. The mother said to the daughter angrily, â€Å"you’ll never get through school unless you get your act together. † Get your act together is the cliche. 4. Name and explain two types of prewriting. Brainstorming, make a list of every idea that comes to mind. Free writing, you fill a piece of paper with any idea that comes to mind about your topic. 5. Choose one of the topics listed below and write a five-sentence paragraph using chronological order To arrange the details of the paragraph. . Signing on to my homepage is simple. Signing on to my home page is simple. First, what I do when I turn on my computer, is click on the internet. Second, I go to the favorites tab and click High School Courses. This automatically pulls up the homepage. Then I go to the top left and click student login. Last, I type in my information and get to work. 6. Choose one of the followin g topics. Write an eight-sentence paragraph that fully develops the topic. d. A high school diploma is important to my future. I feel you can’t be successful in life without some form of education. For example, over the summer I attended a volunteer program at a Homeless shelter. My experience was not bad at all. In fact the people there were really nice. Every person I talked to had either dropped out of high school or did not apply themselves. Discussing with the people at the shelter made me realize my life wasn’t so bad and how having a education is a must in today’s society. After that experience I decided that I needed to get my high school diploma so I do not have to struggle for the rest of my life. By writing this essay I have finally accomplished my goal.

Strategy Review - 2493 Words

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Strategy evaluation should initiate managerial questioning of expectations and assumptions, trigger a review of objectives and values, and stimulate creativity in generating alternatives and formulating criteria of evaluation. 2. Evaluating strategies on a continuous rather than a periodic basis allows benchmarks of progress to be established and more effectively monitored. 3. Managers and employees of the firm should continually be aware of progress being made toward achieving the firm’s objectives. As critical success factors change, organizational members should be involved in determining appropriate corrective actions. VTN (Visit the Net):Show MoreRelatedStrategy Review, Evaluation, and Control1937 Words   |  8 PagesThe best formulated and implemented strategies become obsolete as a firm’s external and internal environments change. It is essential, therefore, that strategists systematically review, evaluate, and control the execution of strategies. 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