Eli5 Why is the value of the Chinese Yuan small compared to other countries (excluding US) even though it has the second largest economy in the world?

Question

Eli5 Why is the value of the Chinese Yuan small compared to other countries (excluding US) even though it has the second largest economy in the world?

In: 29

Answer 1

The chinese central bank purposefully devalues their own currency to make their goods cheaper to foreign consumers. It is estimated that if the Yuan was left to its float market price it would be similar to the US dollar in value.