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  • CULMINATION OF COMMENTS ON: What Would The USD/Yuan[CNY] Exchange Rate Really Be If It Was Allowed To Float Freely? 3 comments
    Oct 22, 2013 9:56 PM | about stocks: DIA, QQQ, SPY, GLD, SLV, AAPL, TSLA, NFLX

    CULMINATION OF COMMENTS ON: What would the USD/Yuan[CNY] exchange rate really be if it was allowed to float freely?

    (please add your thoughts below)

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  • Economic Analyst
    , contributor
    Comments (3774) | Send Message
    Hello Sir Monaco,


    I took your challenge and did a bit of research to provide a basis for an opinion. My back of the envelope calculations show that, based on observed GDP growth patterns, China's relative share of world GDP vs the US can be said to be growing at roughly 1%/year.


    Since Jun 05, CNY has adjusted close to 10% from the previous 6.8/USD level, a move equivalent to roughly 10 years of relative total GDP growth. That is a start, now if you have an idea when to start the 10 year period.

    23 Oct 2013, 10:58 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (362) | Send Message
    Author’s reply » Econ Analyst,


    Thank you for the insight. "Relative GDP share over time" combined with a "historical currency exchange rate trend" is certainly one way to approach the problem.


    Some other factors I was also considering to look at was:


    1. country asset valuations on a comparative basis (consider this the book value comparison approach between the U.S. and China)


    2. money supply comparisons (a pure currency-to-currency quantification for comparison purposes)


    3. China's surrounding country currency exchange rates with the USD (a sales comparison approach)


    can you think of any others beside these 4?


    I too will try to think of some more, if I am able to....
    23 Oct 2013, 12:20 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (362) | Send Message
    Author’s reply » One more would be a simple debt-to-GDP comparison (I would consider this a net comparison approach).


    (now we have 5 approaches)
    23 Oct 2013, 12:38 PM Reply Like
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