Just a year ago the exchange rate of the Chinese currency against the euro was 9,38. It has now dropped to an all-time low of 7,85: the 12-month appreciation of the yuan is 16%, but this is only the nominal appreciation. As inflation in China is higher than in the Eurozone, the real exchange rate – which is the most significant index of price competitiveness – has appreciated even more. The news may not please those who would like a strong and proud euro, but in the lower floors of the productive reality this change is a breath of fresh air for those who fear Chinese competition and those who are working to export to China.
The fall of the euro against the yuan is part of a more general weakness of the single currency, which has been becoming more intense in the last two weeks, in conjunction with another acute phase of that sovereign debt crisis that has been going on for too long. The competitiveness gains of the euro are the only positive aspect of this sad page of the European economy.
http://usa.chinadaily.com.cn/china/2012-05/30/content_15427835.htm
