How does China control the exchange rate of its currency?  BY
Paul Solman  January 11, 2008 at 3:53 PM EDT  This installment’s
“guest vetter” is Martin Neil Baily, now with the Brookings
Institution. He was chairman of President Bill Clinton’s Council
of Economic Advisors and is a certified VKP (very knowledgeable
person). If you wish to be even more suitably impressed, check
out his bio.  Question/Comment: How does China control the
exchange rate of its currency? I don’t see it traded on the
currency exchanges nor do I understand why it isn’t traded. If
other currencies in the world are subject to the whim of the
currency market how can China “peg” its Yuan to approximately 8
per USD?  Paul Solman: The value of a currency is similar, in
principle, to the value of anything. It’s supposedly determined,
that is, by supply and demand. So the Chinese yuan should be
going up as folks with dollars (we Americans) supply more of
them for the yuan we demand, yuan we then use to buy Chinese
stuff. By contrast, the Chin