During the Chinese experience with pegging the yuan to the dollar,the yuan was ________.As a result,there was a ________ of dollars on the market,and the Chinese government had to purchase dollars to maintain the peg.

Question

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When a currency is undervalued, it means it is priced lower than its actual value, which was the case with the yuan during its peg to the dollar. This led to a surplus of dollars on the market, as they were being exchanged for undervalued yuan. To maintain the peg, the Chinese government had to purchase these excess dollars, leading to a buildup of foreign currency reserves.

During the Chinese Experience with Pegging the Yuan to the Dollar,the