Explanation:
Answer: B. Only I. and II. benefit from yuan depreciation
A yuan depreciation (USD appreciation vs. CNY) has the following effects:
Therefore, only groups I and II benefit from a yuan depreciation.
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P1.T3.500.2. Recently, China's central bank devalued the yuan against the US dollar. Consider the impact of a yuan devaluation on the following four groups:
I. Chinese exporters to the US
II. American tourists to China
III. A US bank that has invested abroad in China--but without hedging--by making yuan-denominated loans
IV. A US manufacturer that exports to China
Which of the group(s) benefits directly from an appreciation of the USD against the CNY?
A
None benefit from yuan depreciation
B
Only I. and II. benefit from yuan depreciation
C
Only III. and IV. benefit from yuan depreciation
D
All benefit from yuan depreciation
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