The document discusses the rising prominence of the Chinese yuan internationally. It notes that the yuan is now one of the top 10 foreign currencies in use globally and is becoming a more common reserve currency held by banks and companies, reflecting the growing influence of China's economy. While the dollar still dominates international markets, the yuan's rising stature shows it is challenging the dollar's role over time.

1. The Rise of the Chinese Yuan
Math in the News
Issue 86

2. The Rise of the Yuan
The Chinese Yuan is becoming a more
prominent currency internationally. Watch the
following video to learn more.
http://youtu.be/bBSEvRNaA8c

3. The Rise of the Yuan
The Yuan is far from overtaking the role of the
dollar in international markets, but it is now in
the top 10 foreign currencies in use.
Note: These percentages are greater
than 100% because two currencies are
involved in each transaction.

4. What is Currency Exchange?

5. Currency Exchange
If you’ve ever traveled to another
country, you’ve had to deal with foreign
exchange.
Let’s look at an example.

6. Currency Exchange
Suppose you’re traveling from
Laredo, Texas, to Nuevo Laredo, Mexico. You
find some souvenirs that cost 100 pesos. How
much is that in dollars?
This is where exchange rate comes in.

7. Currency Exchange
Currency exchange
rate tables are used
to determine the
value of something
in another currency.
Exchange rates vary
from day to day, as
you can see here for
the exchange rate
between US dollars
and Mexican pesos.

8. Currency Exchange
Set up a proportion
to solve.
x dollars
1
=
100 pesos 13.1256
100
x=
pesos
13.1256
» $7.62

9. Currency Exchange
Because the exchange rate varies, the price of 100
pesos in dollars varies.
$7.62
$7.79

10. Currency Exchange
On the business side, these types of
transactions happen much more frequently.
Let’s look at an example.

11. Currency Exchange
Starbucks purchases coffee beans from
international suppliers. For example, when
Starbucks purchases a supply of beans from
Colombia, it needs to pay for that in
Colombians pesos.

12. Currency Exchange
Since it purchases a
huge volume of
Colombian coffee, to
save
money, Starbucks can
purchase Colombian
pesos when the
exchange rate is
favorable and use
them later to
purchase coffee
beans.

13. Currency Exchange
Some commodities are priced in US dollars.
For example, OPEC oil is priced in dollars. This
simplifies the purchase of oil, since currency
exchange fluctuations aren’t a factor.

14. What is the Foreign Exchange
Market?

15. Foreign Exchange Market
Whenever one currency is exchanged for another, a
bank or currency trader is involved. There is a small
fee for the exchange, and this is how banks make
money from foreign exchange.

16. Foreign Exchange Market
The Foreign Exchange Market (Forex) tracks the
exchange rates for all currencies around the world.
The exchange rates vary daily. The Forex deals with
buying and selling currency.

17. Foreign Exchange Market
Some banks will purchase different currencies and
keep them in reserve. As you saw from the
Starbucks example, keeping a reserve of certain
currencies avoids the daily fluctuations in currency
pricing.

18. Foreign Exchange Market
The dollar remains the world’s largest reserve
currency. This is an indication of the dominance of
the US economy.

19. Foreign Exchange Market
In recent years the Chinese Yuan has become a
growing reserve currency. More and more
companies are paying in this currency or are asking
to be paid in it. This is an indication of the growing
influence of the Chinese economy.