Although RMB has been "depreciating" against the US dollar over the past 10 days or so, the RMB is actually becoming the strongest currency around for this year to date. This is because of the rapid appreciation of the US dollar against most currencies. In the first half of this year, the strongest currency had been the Swiss Franc. As of today, the RMB has gained over 3 per cent against the WCU2000 while the Swiss Franc has gained by less than one per cent since January 1. Relative to the benchmark basket of WCU currencies(GDP2005 weighted), the RMB has gained 6.13 per cent since the beginning of the year. The Swiss franc has only gained 4.03 per cent. The US dollar has lost only 0.34% against the benchmark currency basket. The British pound is now the weakest of the currencies listed in our Quotations table as of today.
The strength of the RMB is expected to put downward pressure on inflation on the mainland. At the same time it is going to be a major drag on the economy as exports are expected to decline dramatically over the rest of the year.