American economists often complain that the Chinese government is keeping the yuan artificially low. Right now, the Chinese are keeping their currency pegged to the U.S. dollar (it floats freely against other currencies) at what some feel is a too-low exchange rate. But those economists should be careful what they wish for. The U.S. currency has lost ground against other currencies, of late, and a rising Chinese yuan would mean a descending U.S. dollar. I believe that the reason the U.S. currency hasn't descended even further than it has is because it has been pegged to the yuan, demand for which has increased in the last decade, as China's economy has been booming. If the yuan floated freely, the 'greenback' wouldn't be worth the paper it's printed on.
My prediction, with a freely floating yuan, after 6 months:
1 U.S. dollar = 5.5 Chinese yuan (or less) (6.8 yuan today)
1 US$ = .90 Canadian dollars (meaning the Canadian dollar is worth US$1.10)
1 US$ = 1 Australian dollar
1 Euro or UK pound = 2 US$ (or more)
(etc.)
On the other hand, historically speaking, every new currency (or newly floating currency) has always LOST value within the first year of its introduction/free exchange. So the Chinese yuan might actually decline in value after an initial bump, if it is allowed to float freely.
