CNBC Explains

China’s Currency Peg: CNBC Explains

CNBC Explains
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China's Currency Peg: CNBC Explains

Countries around the world keep their currencies pegged to the U.S. dollar, but how is this balance maintained? We saw in a previous video how a floating exchange rate can significantly affect international trade, but how is this achieved? It’s a simple case of supply and demand, says Salman Khan of the . Learn how the Chinese Central Bank has traditionally pegged the Yuan to the dollar, and in the process maintained a trade imbalance.

From this video, you’ll understand:

  • The mechanics of pegging currency
  • The relationship between currency pegs and trade
  • How a country like China can keep its currency undervalued