Explain in full and give your references to the following questions:

1. Why did the Chinese yuan depreciate against the dollar between August 2015 and December 2016?

2.What were the benefits of the depreciation for China? What were the costs?

3. Why do you think the Chinese government tried to limit the depreciation by using dollars to buy yuan? Why did it not stop the fall in the yuan?

4. Why did conditions reverse in 2017, with the yuan appreciating against the dollar? What does this tell you about how the foreign exchange market works?