International Business China Question Answer 2022

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student
Name of the University
Author Note

INTERNATIONAL BUSINESS
1
Table of Contents
Answer to question 1.......................................................................................................................2
Answer to question 2.......................................................................................................................3
Answer to question 3.......................................................................................................................3
Answer to question 4.......................................................................................................................4
Answer to question 5.......................................................................................................................4

INTERNATIONAL BUSINESS
2
Answer to question 1
Three choices that Chinese Government faces while determining the currency value:
Modification of the fixed exchange rate: From 1995 to 2005, the currency value of China was
pegged with respect to the US dollar. However, yuan, China’s national currency has been started
devaluing through a narrow trading band (Aftab, Muhammad and Izlin Ismail).
Supervise the currency value through market intervention: In this way, the Chinese
government can purchase or sell currency through interbank market maintaining the standard
foreign exchange reserve.
Evolution of currency policy: China can integrate its domestic economy with the international
by promoting the yuan as a global reserve currency.
Out of the above three discussed options, it would be the best option for the Chinese
economy if it modifies its fixed exchange rate to the floating currency rate. This will help the
country to maintain stability between the supply-demand conditions of the foreign exchange
market.