Reference no: EM131464829

It is about economics. Compare and contrast the difference between a fixed and a floating exchange rate system. From the perspective of an international business, what are the most important criteria in a choice between the systems? Which system is the more desirable for an international business? write about 300-400 words

Some information:

Here is a good article that explains how China shifted its foreign exchange policy from fixed rate system to a managed float system (also known as dirty float) since 1994. The managed float system since 2005 worked well to keep the Yuan undervalued and make Chinese exports competitive in global markets. https://www.smh.com.au/business/markets/currencies/dirty-float-how-china-manages-its-currency-20150811-giwgcs.html (Links to an external site.)

We also see that countries enter 'currency wars' to support their exports and economic growth. In the following example, you see Japan's retaliation to the devaluation of the Chinese Yuan. https://www.cnbc.com/2016/01/29/bank-of-japan-stimulus-may-increase-asian-currency-volatility.html (Links to an external site.)

President Trump also accused China of manipulating its currency but recently backed up from his accusations (see the following articles). Please comment on currency manipulation by other countries and the effects on US economic growth.

https://www.washingtonpost.com/news/wonk/wp/2017/04/14/trump-administration-officially-declines-to-label-china-currency-manipulator/?utm_term=.730c0fb2563f (Links to an external site.)

https://www.nytimes.com/2017/04/11/business/economy/trump-china-currency-manipulation-trade.html?_r=0