Background Note | HBS Case Collection | June 2011 (Revised August 2011)

China and the Yuan-Dollar Exchange Rate

by Aldo Musacchio


This note explains how the People's Bank of China (PBOC) manages (some say manipulate) the dollar-yuan exchange rate. It discusses briefly the process of sterilization in China and the possible costs for the PBOC. Therefore, the note summarizes some of the main challenges the PBOC faces to contain inflation in China and to keep Chinese exports competitive.

Keywords: Currency Exchange Rate; China;


Musacchio, Aldo. "China and the Yuan-Dollar Exchange Rate." Harvard Business School Background Note 711-110, June 2011. (Revised August 2011.)