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> Even if the exchange rate is tied to the dollar by fiat, devaluing it does so against all other currencies, because nobody is going to accept less yuan for th
by rtkwe 7y ago
> Even if the exchange rate is tied to the dollar by fiat, devaluing it does so against all other currencies, because nobody is going to accept less yuan for their euros than they could get by exchanging euros for dollars and then dollars for yuan.
Depends on the fees at each hop. A small fee could eat up the whole arbitration opportunity for our hypothetical EU or US buyer.
- AnthonyMouse 7y agoExcept that nobody actually does it that way because the fact that they (including large players that don't pay anyone commissions) could do it just increases the number of yuan anyone can get for a euro.