Finally, sometimes governments intervene in the value of their country's currency. Th

Discussion in 'Economics' started by nooty, May 18, 2007.

  1. nooty

    nooty

    Finally, sometimes governments intervene in the value of their country's currency. They will buy/sell their currency to make it worth a certain amount. If a country wants to do this, it will need to have enough foreign currency in its reserves to buy back its own currency. Until recently, China had its currency "fixed" at 8.28 Chinese Yuan to the U.S Dollar. To do this, the Chinese government had to buy and sell enough of their currency to make it worth that amount, and guarantee that people can always exchange 1 US Dollar for ever 8.28 Yuan whenever they want - to prove its value.