Yuan is Too Strong

Scott Grannis of Calafia Beach Pundit blog has an excellent piece on China’s currency move which you can read by clicking the link.  Below we show his chart of the real value of the Yuan to keep the longer term in perspective.  He writes, “Over the past 20 years, China has strengthened its peg vis-a-vis the dollar considerably, from 8.4 yuan to the dollar to now 6.3. As the chart (below) shows, the real value of the yuan against all other currencies has doubled in the past 20 years. So it’s fair to say the yuan has been an incredibly strong currency for the past two decades. That it should drop 2% against the dollar is hardly noteworthy. Maybe it was just too strong, and now it’s a little bit less than ‘too strong.'”