Explain how an increase in the American demand for Chinese goods leads to a change in the Chinese yuan relative to the U.S. dollar


Americans who wish to buy more Chinese goods will need more Chinese yuan. This increase in demand for yuan increases the price of yuan (relative to the dollar) on the foreign exchange market. The yuan has, therefore, appreciated relative to the dollar, and the dollar has depreciated relative to the yuan. A yuan will buy more dollars than before, and a dollar will buy fewer yuan.

Economics

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