Chart of the Month, May 2006: EUR,USD to CNY

Observing the ongoing news about China, the US and Europe, the fight between those three large economies is not getting any smaller recently. The CNY has been re-evaluated July 2005, but critics said that this was not enough. At least, there is a recent tendency that this re-evaluation might strengthen itself over time, but the average increase is still very small towards the USD. The recent discussions on strong increases or tariffs on imports from China to the US might hurt US-Companies just as much. It will become more expensive to pay salaries in China and products being re-exported become less competitive against US-Manufacturers.
The Euro however is recently moving into the opposite direction, making it cheaper for the Europeans to produce in China. So European companies might be investing more into China, while the local business might suffer more than ever. An increased tariff in the US might push this even more into that direction. Unless China manages to have a independent currency, those fights will be going on. Once this is over however, all the other cheap markets in Asia that are not pegged to the USD, might then have a fair chance of competing