Gary’s Q&A

Listener question & Gary’s response · Transcript passage

Jarom Nelson asks Hey, Gary! I drive my daughter to school every weekday, and we listen to EED on the way. She loves your podcast. Her questions are: Who decides how much a dollar is worth in China? And why is school so early? Jarom and Amy from Livermore, CaliforniaFirst, let me say that school starting early is a holdover from when most people lived on farms. There is a fair amount of research that shows students perform better when school starts later, and kids stay out of trouble when the gap between school ending and parents getting home from work is smaller.I have no idea why school starts so early.

Depending on how you define it, there are over 150 different currencies in the world. Most of them have a floating exchange rate. Meaning that how much of it you can get for another currency depends on what the market will bear. Some countries have a peg, usually to the US dollar, because of its status as the world’s reserve currency. They will set an exact amount of dollars that someone can convert their currency for. What China does is somewhere in between. They have a managed float, which means that they will let the market determine the exchange rate, but only within certain parameters. Once the exchange rate goes outside of those boundaries, the Central Bank of China will step in and sell or buy Chinese yuan to keep the exchange rate within the parameters.

I might do a full episode on the subject of exchange rates and foreign currencies.