Question

Please help me to answer these quétion

ofNNC's? Discuss the change. of vnD valus against usD undar R China Trade Wart mpact of. us .Pl ase discuss impact of us-China Trade War on FDT Oudploos of VN in ngar futuse? (Inflows 4Discuss econamic aposuse. Qf US- based uncs. e usD appeciaties aganstan Euro Yn

Answer 1

(2) The dong/dollar rate have fluctuated in previous days when US ban decided to impose imports tariffs on China of 25% on $200 billion. In exchange China raised the import tariff on US from 5% to 25%. In total there are less chances that there will be upward or downward pressure on Dong value as there are appreciation and depreciation pressure which will cover out. As China bears the tax which had put the yuan value in depreciation (devaluation of currency) which leads to increasing exports in Vietnam market because weakening of your currency makes your goods cheaper which eventually which had caused pressure on dong/dollar value. In the context of the trade war, the State Bank of Vietnam has many times affirmed that it will regulate the dong/dollar exchange rate in a flexible way and will make intervention when necessary to stabilize the forex market. The Government will have to decide either to devalue the Vietnamese dong further against the US dollar to support exports and avoid cheaper Chinese goods to flood in the local market, or keep the dollar/dong exchange rate stable to avoid increased public debt and control inflation as the US-China trade war accelerates.

(3) China always attracts foreign investment first, then they go for exports in the world. US businessmen were attracted towards the level of cost of production they were enjoying there led to money outflowing from the USA economy and which helped the Chinese economy growing which Donald Trump did not liked and trying to stop by imposing some level of tariffs. The US trade deficit in part reflects the benefits that American firms enjoy in China, in the form of lower production costs. Chinese currency appreciation is generally bad news for foreign multinationals, as their production costs go up. As Trump raises tariffs which raises the cost of Americans firms operating in China and eventually lowers the benefit for USA. American firms benefit from the rise of China in the short term in the form of lower costs, but will ultimately suffer in the long run as China becomes more competitive. This is why Trump wants to bring manufacturing back to the US. Inflows might increase and outflows will reduce as Trump is imposing many pressures. So now we cannot say what would be the total impact on FDI in short term.

(4) If dollar appreciates against the major currencies of the world, it means the value of US dollar have increased respectively which will make their exports costlier and imports cheaper. When the value of your dollar rises you can easily buy goods in foreign market. According to this net exports will fall which is a bad sign for a healthy economy. Once net exports starts climbing, US dollar will depreciates in the long run and will come at the same level where it was before.