CHART: China's yuan fluctates based on political pressure, not the free market.

Posted by scapozzola on 08/01/2013

China's continued currency undervaluation is an ongoing problem for U.S. manufacturers.  It's also a topic that gets kicked around plenty in Washington.  The question is whether Congress and the Administration will finally take action.

Simply put, China's currency is pegged to the U.S. dollar.  But it fluctuates at times based on political considerations, namely the threat of action from U.S. lawmakers. 

Such moves are always perfectly timed, giving Beijing room to say that it is making progress and thus fend off critics. 

The chart below shows just how much Beijing actually responds in those rare instances when Washington threatens to respond.

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