Industrial Insight

China currency and trade. | July 30, 2010

Renminbi Peg: On Again, Off Again

Owen F. Humpage and Beth Mowry

Between mid 2005 and mid 2009, when the People’s Bank of China previously loosened its grip on the renminbi-dollar exchange rate, the renminbi appreciated approximately 20 percent on both a nominal and a real basis against the dollar. (The real basis is what matters for assessing competitive patterns, because it accounts for price pressures in both the United States and China.) If this appreciation had any effect on the U.S. merchandise trade deficit, it is imperceptible in the data. The U.S. merchandise trade deficit with China continued to grow from $17.6 billion in June 2005 to around $21 billion as the global economic slump settled in and dampened worldwide trade.

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I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.







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