Saturday, July 10, 2010

Foreign Exchange Market, Yuan on Air

Several months ago, I was asked to call in to morning radio program "The Takeaway" to explain how a change in China's currency policy could potentially affect foreign exchange markets, the balance of trade, and unemployment in the U.S.

The producers of the show were curious as to how this news might be presented in a high school economics classroom since very few adults seem to understand how basic economic principles apply to international economics.

Without getting too political, I concluded, "American goods might look more attractive to the Chinese if the Yuan appreciates against the dollar…and that greater demand for US goods would increase demand for US dollars and demand for American jobs."

Here is a link to my simplified explanation of the foreign exchange market on "The Takeaway."

http://www.thetakeaway.org/2010/apr/09/the-yuan-also-rises/

No comments: