The U.S. dollar vs. the Chinese Yuan: (May 2006 to April 2007).(Alaska Trends for July 2007)

The United States Federal Reserve keeps a record of exchange rates between world currencies and the U.S. dollar. This record serves as a historical record of the fluctuations within the foreign exchange market, where currencies from different countries change hands. The foreign exchange market is one of the largest markets in the world, seeing trillions of dollars worth of currency exchanged every day.

The Chinese Yuan was pegged to the value of the U.S. dollar at a rate of 8.2768 Yuan to one U.S. dollar from 1994 to 2005. Once the value of the currency was freed, the price of the Yuan has risen steadily. In June of 2006, the exchange rate was 8.02 Yuan for every U.S. dollar. In May of 2007, just under a year later, the exchange rate is 7.71 Yuan for every U.S. dollar.

The strengthening Chinese Yuan is another indicator of the robust growth of the Chinese economy. As the Yuan grows stronger, exports to China will become cheaper, and imports from China will become more expensive. There is no indication that the price of the Yuan will do anything but fall for some time.

Source: www.federalreserve.gov

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