The US Treasury Department as well as Congress have been asking China to revalue upwards the value of their Yuan. China has responded to these repeated requests by allowing the Yuan to trade within a narrow band. The band itself is then shifted upwards by small increments from time to time. Still, the US claims that China has not done enough and should raise the value of the Yuan by at least a further 20%. The reasons given to justify this requested increase are as follows: 1. The artificially low value of the Yuan makes US manufactured exports unattractively priced in China. 2. The present undervalued Yuan leads to excessive US imports of Chinese made goods which in turn leads to an unwelcome trade balance in China?s favor. For example, the trade deficit with China was roughly $20 billion for the month of May, 2007. The total trade deficit for the US for 2007 is projected to run in excess of $700 billion. If China does not revalue the Yuan Congress is presently threatening to impose a range of tariffs on Chinese good entering the US. Suppose China suddenly decided to give into the US demands and, overnight, revalued upwards the Yuan by 20%. Consider the impact of this increase in value of the Yuan on two large US companies: (1) Yum!Brands whose 2007 second quarter profits were $214 million roughly half of which resulted from sales made by KFC and Pizza Hut within China; and (2) Wal-Mart where the great majority of the products sold in its US stores are made in China. Do research on each of these companies and then explain what each company should do to protect themselves from such a change in currency values.