New answers tagged exchange-rates
1
Quote...
"Suppose the PBOC buys a bunch of dollar-denominated bonds, using its
dollar reserves. All else equal, what effect should this have on the
yuan-USD exchange rate?"
Quote...
" I am having trouble seeing whether or why it might cause the yuan to
depreciate".
All else is not equal. To return to the original quantity of USD money ...
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Dollar is a safe heaven currency, when there is crisis or economic uncertainty like the one we are in now (i.e., Covid) most people start to hoard US dollars.
USD is the world reserve currency and it provides unmatched privilege to USA, any attempt to by pass it in international trade is fatal, you get boomed to ashes like Iraq or Libya.
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