I. Introduction of currency wars
War using the exchange rate policy has been sustainable like Europe’s exchange rate policy in the early 20th century and Japan’s exchange rate policy after World War II. Recently, Economic purposes such as restoring slowdown of economy due to financial crisis and recovery of trade deficit are combined with political purpose and retaliatory currency manipul
Ⅱ. Effects of RMB appreciation on China
□ Exchange rate system of China
- The Chinese exchange rate system is the fixed exchange rate system which is fixed to the dollar. In 1994 January 1, China unified the official exchange rate and the market exchange rate and adopted a managed floating exchange rate system that restricted one day exchange rate fluctuation band with ±0.3% of the precedi
economic depression dragging down clothing businesses, prominent foreign brands face sluggish sales and busy terminating their businesses in Korea. Fashion industry expects the next year’s sales will decrease 4.5%.
② Flood of SPA brand
The current fashion market is experiencing a lot of difficulties in fashion forecasting due to consumers′ fast-changing lifestyle on fashion, changes in
exchange rates cause losses in exchange rate profits. However, recently, the economic status of Korea has been recovering slowly and has also shown possibilities to continue.
The stabilization of such financial markets, aided the object-economy into stabilization as well. On the last quarter of 2008 which recorded a drop in GDP growth turned back to a positive growth of 0.1% on the first quarter
2. Policy Analysis with Partial Capital Mobility
• Expansionary fiscal policy, fixed exchange rates
IS curve shifts right, Y and R increase.
Higher R increases foreign capital inflow.
• Creates BP surplus and upward pressure on currency.
Central bank intervenes in the foreign exchange market.
• Buys excess foreign currency.
Incr