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