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?
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The yuan is just a unit of currency. Its value is in what it can buy, not hiw it compares to currencies of other markets.
Asking why the yuan is small compared to the a US dollar is like comparing the US cent to a Euro or the Japanese yen to a Canadian dollar.
All currency is somewhat imaginary when it comes to value. The market (supply and demand) decides what the buying power is worth.
How much a loaf of bread or a pound of rice costs in the local currency is far more important than something abstract like how many “cowrey shells” you can get for a “buck”.
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