What is happening to the RMB vs USD?

I remember about 3 years ago the exchange rate for 1 usd got 8.24 RMB now it is down to 7.93 for 1 USD....can someone explain this in a simple way...why this is happening and will it stop?|||The RMB exchange rate is actively managed by SAFE, the Chinese foreign exchange oversight bureau. Up until last summer, the currency was managed in such a way that the USD-RMB exchange rate never fluctuated from US$1 to about RMB8.28. However, the Chinese government decided to loosens exchange rates and have slowly been allowing the exchange rate to slide to more market driven levels.





No one knows for sure how far or how fast they will allow it to change but it is widely expected to continue the current trend for the next year or so. Either they will allow it to loosen until it trades freely or they will tighten it and reset the peg, but at this point no one really knows where or when it will stop.





There are two reasons for the change. First, the Chinese government is getting a lot of pressure from the International community to loosen exchange rates because at the current levels it was giving Chinese exporters an advantage over foreign importers. The other reason is that in order to control the exchange rates, the Chinese government had to buy huge amounts of foreign currency. The current foreign currency reserve is getting too large for the government and so they want to reduce it.|||In addition... If the US stopped printing monopoly money, China would be unable to buy the US's monopoly money. So the US is just as culpable as China, if not more, at this awful currency peg. Therefore, the currency peg is actually due to US policy, NOT China policy, like everyone keeps saying.

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|||Simple Way to Explain without all the mumbo jumbo..





USA is in debt (Heavily!).. thats why their currency is falling against every other curreny in the world.. i.e. u get less RMB for the same USD as u would did a few years back..





China is controlling its economy with a rather tight rein the past few years n now its booming n realising the power of capitalism n with pressure from WTO n others, its relaxing its control a bit..


Also China with its huge local market, has not much need for export n thus could afford the rise in RMB against other currency..





Will it Stop?


No it wont stop.. even if china tries to regain control, US debt is still increasing so u will get less RMB for 1 USD next year or so