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Yuan presentation demand and supply


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Yuan presentation demand and supply

  1. 1. ECONOMY What is Yuan & why it place an important role globally? Yuan is a Chinese currency; China has grown so quickly and surprisingly due to its super cheap exports. China has the worlds largest money printing operation but still fails to meet demand for Yuan.
  2. 2. DEMAND AND SUPPLY Buy Foreign currency with Yuan when Demand exceeds supply. Sell foreign currency for Yuan when supply exceeds demand.
  3. 3. DEVALUATION Devaluation is lowering of the value of a countrys currency within a fixed exchange rate system and keeping it at fixed rates irrespective of the fluctuations in the global currency market. The lowering of a currency helps the nation export more vis-à-vis other countries. For example, suppose one dollar is equal to Rs 100. And if the rupee was devalued by 10 percent, the equation becomes USD 1 = Rs 110. This means Rs 10 extra for exporters for every single dollar they earn in the global market. What could be the Impact? China is US’ biggest lender. It holds USD 889 billion worth of US government bonds - creating a potentially potent weapon. If China decides to dump the holdings, US dollar will collapse, plunging the world’s largest economy into deep chaos.
  4. 4. DEMAND-SUPPLY CURVE Series 1 6.7 6.662846.65 6.60482 6.6 6.546796.55 6.5 6.48877 Series 16.45 6.43075 6.46.35 6.3 Mar/11 Apr/11 May/11 Jun/11 Jul/11