Recently I was browsing through the Globe and Mail and discovered an article expressing the continuous growth of the yuans exchange rate. On Tuesday the yuan rose for its ninth straight day and broke the significant level of 6.70 per dollar which the U.S was greatly discontent with. Dispute over the rising exchange rate and yuan appreciation grew as trade between China and the U.S had significantly become unbalanced. The high increase in yuan creates further difficulties for the already struggling U.S economy, which is currently dealing with trade deficiency. The U.S trades globally; therefore higher exchange rates could lead to Inflation, causing the U.S economy to further decline.
I acknowledge that much of U.S trades are delivered from China, however, if the growth of the yuan’s exchange rate generates higher costs, the U.S will be forced to decrease trade. Sequentially, this can cause entire economies to fall as both countries depend heavily on the other for imported goods. What may momentarily resolve this crisis is if the U.S slowed down exchange with China and increased with other countries whose currency exchange had no effect on the cost of trade. Yet, it appears to me that the U.S needs to worry about its own currency stability and focus on economic recovery before the country reaches its point of internal downfall.
