| One of the arguments put forward for resisting the revaluation of the Chinese yuan is that China will “lose value” on its large foreign-exchange reserves, held mainly in U.S. dollars but also in sundry other currencies. If China’s exchange rate is moved, for example, by 10% from 6.6 yuan per dollar to 6.0 yuan per dollar, the yuan value of China’s reserves will fall by 10%, thus reducing China’s wealth.
This argument is arithmetically correct, but economically incorrect. China’s wealth will not decline with revaluation of its currency...........................................Full Article: Source
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