The exchange rates between CNY and USD that are pegged with unrealistic values has become a major controversy in recent times. One major question that everyone has started asking is, who controls these exchange rates?
Well let us start by saying that money markets around the world follow different regimes and techniques. We will analyze these in a separate article, but for now let us view it from the eyes of United States of America.
USA follows differential treatment to various countries based on its "blind view" of the country and its historic (Prehistoric!!) relationships. It also has dual standards when it comes to acceptance and trading norms. Without moving away from our topic today, China on the one hand sets the value of its currency suiting the "day need" of its economy and US on the other, supports some countries that peg its money with US back-up and pressurizes some countries like China to change its value based on the trade differences and needs of its own purposes.
As a common man, we can say that both economies here are not innocent and pure from need based set-ups. Well just to be neutral, it is good for us in some cases that China purposefully suppresses the exchange rate on CNY and some cases untrue pegs lead to pitfalls.
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