The Chinese central bank set the mid-point for the Yuan's trading range lower for a fifth consecutive day Tuesday according to China Daily. The Yuan has fallen slightly against the USD since it's peak on July 17, but overall the Yuan is up against the dollar 6.6% so far in 2008. Some analysts believe the Yuan will now trade up and down but not get higher than the 6.6% level.
It appears the Chinese government needs to slow the growth of the RMB versus the dollar to give exporters a break even though this might be harmful to the governments battle against inflation. It's a difficult balance to maintain. Also, the expectation of continued strengthening of the RMB has attracted "hot money" to China. Varying the exchange rate direction will keep speculators from causing problems like they have in the US real estate market.
It will be interesting to see where the RMB goes from here.
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