Chinese Yuan-USD ($) Forex Exchange Rates
The pegging of the Chinese Yuan ended in 2005, and since then this is the highest level of Chinese Yuan to trade against the USD. At the time of writing this article, the yuan was quoting at 6.583 against the USD.
China is learned to have around 252 billion USD trade surplus with the USA and it was indicated that Yuan can appreciate further from the current levels.
It is also alleged that China has been keeping the Yuan artificially weak, and that has given an unfair advantage to Chinese service providers and exporters, thereby causing a loss to the US based manufacturers as it is cheaper to get goods as well as services from China, if the exchange rates are low in Yuan.
It is also mentioned by one of the officials that the Chinese currency is really under-valued, to the tune of more than 40%. Now that is a big figure. If the Yuan continues to appreciate further, and becomes fairly valued it will definitely hit the Chinese Exporters, both for the services as well as good sector. But that will tilt the benefit in favour of American manufacturers and service providers.
However, chinese officials are looking for bigger picture of better relationships between two big nations - USA and China - rather than the Chines Yuan - USD exchange rates. One good thing in favour of stronger Yuan for China is that it will help it control the inflation, which is currently clocking above 5%.
One may see more policies taking shape, to support the Yuan. Let's see what comes out of the Chinese President's visit to the USA, and what effect it has on the USD-Yuan exchange rates.
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