A disadvantage for China of keeping its currency pegged at a relatively weak level is

Question

Quizplus · Accepted Answer

When China keeps its currency pegged at a relatively weak level, it faces several disadvantages: A) the price of imports becomes high because it takes more of the local currency to buy the same amount of foreign goods, B) to maintain the peg, China must hold large reserves of foreign currency, often in the form of low-yielding bonds, which can be a less efficient use of resources, and C) a weak currency can deter foreign domestic investment as investors may get less value for their money and worry about future devaluations.

A Disadvantage for China of Keeping Its Currency Pegged at a Relatively