May 16, 2008
Economy at a Glance - May 20, 2008
Yen and Yuan are moving up in value
American legislators have gotten some of what they wanted from the Chinese government with respect to the yuan. It has appreciated nearly 20% versus the U.S. dollar since it was allowed to partially float in July 2005. This has made Chinese goods somewhat more expensive when imported into the U.S. Because the Canadian dollar has appreciated at an even faster rate versus the U.S. dollar, Chinese goods are still a little cheaper in Canada now than they were three years ago.
There is another implication that goes along with the relative changes in value. At the same time as the yuan has increased about 20% versus the U.S. dollar, it has fallen about 10% relative to the Euro. This means that Chinese goods have grown cheaper in Europe, even as they have gone up in price in the U.S. As a result, the profile of Europe as a major customer for Chinese goods is on the rise relative to the United States.
Over the past six months, the numbers of greenbacks and loonies to buy one hundred Japanese yen have been on the increase. This appreciation in the value of the yen makes it harder for Japanese exporters to sell into North America. It also lowers the after-conversion revenues that Japanese firms located in North America, such as automakers, are reporting back to their head offices.
For more articles by Alex Carrick on the Canadian and U.S. economies, visit his blog and Market Insights.
Canadian and U.S. Dollars to Buy 1 Japanese Yen
Canadian and U.S. Dollars to Buy 1 Chinese Yuan*
*Also known as the Renminbi or "people's currency" - a partial float was allowed beginning July 2005. Data points are month-ending figures.
Data source: www.x-rates.com.
Charts: Reed Construction Data - CanaData.
