On July 21, 2005, the Renminbi’s(RMB) peg to the U.S. Dollar was removed.  The RMB now fluctuates to a managed floating rate based on market supply and demand with connection to a combination of other foreign currencies.  Once the peg was removed, RMB revalued to 8.11 to every USD.  Since then, the RMB has continuously strengthened against the dollar, now trading at around 6.85 RMB per USD.

The more the dollar weakens, and the more the RMB strengthens, the more expensive China Manufacturing becomes for U.S. companies.  The United States has continuously reaped the rewards of cheaper manufacturing costs in China, but if this trend continues, this market advantage will not be as great as it is today.  Many talk about the need to bring some of this manufacturing back to the U.S., but we absolutely cannot compete with Chinese manufacturing costs right now.  We must take advantage of China manufacturing while we still can.  The manufacturing cost in China has a great effect on the price of goods in the U.S.  The USD to RMB exchange rate is something that we must always keep a close eye on.