I'm reading more and more from China that the exchange rate will stabilize longer-term. In the short term the RMB actually lost ground to the USD in August. It was a small depreciation, but a significant one given the history of the exchange rate since the July 2005 un-pegging.
In a Financial Times interview, Cheng Siwei, vice-chairman of the standing committee of the National People's Congress, notes that the RMB does not need to appreciate any more versus the dollar. He notes the RMB will likely strengthen against other currencies, but as the dollar gains strength around the world it will stabilize versus the RMB.
Some stability in the rate would be very good news for US consumers fearing continued inflation and for OPSA. The fall of oil prices over the last several weeks is also good news for OPSA customers and the US economy. I'm betting and hoping oil falls to about $95 a barrel for a while. At the same time I look forward to new breakthroughs in energy that will reduce reliance on oil and be better for the environment.
Optimism reigns on this first day back to school for kids here in the US!
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