As you can see in the chart, the RMB to USD exchange rate is essentially flat since about July 2008. There has been almost no attention paid to the exchange rate since this time when the economy really started to be in a recognized decline.
What will happen when the global economy starts to improve? A year ago I was guessing the long-term direction was for the RMB to continue to strengthen versus the dollar. Now I suspect this exchange rate is now set for a while and will not change much for the foreseeable future. The weakness of the economy has taken the pressure off and I don't see it returning for quite a while. In fact, I believe the probability of a reversal is higher than the probability of further RMB strengthening. However, I believe the highest likelihood is we see long-term stability.
No comments:
Post a Comment