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What does it mean by Stronger Yuan?

  • Post #1
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  • First Post: Jun 21, 2010 10:32am Jun 21, 2010 10:32am
  •  KPForex
  • | Joined Dec 2009 | Status: Member | 241 Posts
What does it means by that? does that means Yuan currency would go up and US Currency would go down?

need ur help... thanks
  • Post #2
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  • Jun 21, 2010 10:48am Jun 21, 2010 10:48am
  •  Rabid
  • Joined Jan 2008 | Status: Lunatic Supreme | 1,840 Posts
Basically, yes. A strong Yuan would mean the Yuan, relative to whatever other currency it's compared to, is stronger (goes up). Sometimes it's compared to several currencies.
 
 
  • Post #3
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  • Jun 21, 2010 10:55am Jun 21, 2010 10:55am
  •  mihazupan1
  • | Joined Jun 2010 | Status: Member | 199 Posts
If a currency appreciates it means that you have to pay more units of a foreign currency (USD for example) for one yuan in this case.

The problem here is undervalued RMB and as a consequence, increased Chinese export.

For example: you go to China and you get 10 RMBs for a Euro as it's undervalued (let's say you'd get 5 normally) and you can buy more goods and bring them home.
 
 
  • Post #4
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  • Jun 21, 2010 11:08am Jun 21, 2010 11:08am
  •  KPForex
  • | Joined Dec 2009 | Status: Member | 241 Posts
thanks... so is that good or bad for the US economy? and why?
 
 
  • Post #5
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  • Jun 21, 2010 12:32pm Jun 21, 2010 12:32pm
  •  Rabid
  • Joined Jan 2008 | Status: Lunatic Supreme | 1,840 Posts
Quoting KPForex
Disliked
thanks... so is that good or bad for the US economy? and why?
Ignored
A strong Yuan means that Chinese goods are more expensive in terms of dollars. That means that competitive nations' goods will be relatively cheaper, and manufacturing for those producers might improve if the trend continues.

In theory, it's good for US manufacturing. In practice, for most products, there are plenty of other nations ready to pick up the slack. So the affects will be mostly muted, however traders might take it as a good sign for US producers and trade it accordingly.
 
 
  • Post #6
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  • Jun 22, 2010 7:00am Jun 22, 2010 7:00am
  •  PurplePatch
  • | Commercial Member | Joined Jun 2010 | 89 Posts
I would assume that it would be good for the US simply because they have been the ones pushing for it.
 
 
  • Post #7
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  • Jun 22, 2010 11:56am Jun 22, 2010 11:56am
  •  Rabid
  • Joined Jan 2008 | Status: Lunatic Supreme | 1,840 Posts
Quoting PurplePatch
Disliked
I would assume that it would be good for the US simply because they have been the ones pushing for it.
Ignored
Obama gets a lot of support from labor unions. If manufacturing goes overseas, there aren't a lot of unions left. Thus he pushes for a stronger Yuan in hopes of boosting US manufacturing.
 
 
  • Post #8
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  • Last Post: Jun 22, 2010 12:50pm Jun 22, 2010 12:50pm
  •  PurplePatch
  • | Commercial Member | Joined Jun 2010 | 89 Posts
The president of America with Ulterior motives - I'M SHOCKED
 
 
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