The Chinese Yuan has strengthened against almost every Worldwide currency over the last 12 Months. Much of this increase is tied to the strengthening of the US Dollar and the fact that the RMB is loosely linked to it, but also the increase is due to the past and expected future growth of the Chinese economy.
There have been huge inflows of investment and cash into China and its economy over the last year to such an extent that the government had to put in place almost emergency measures to curb and control this inflow. Well the tide has now turned whilst no-one would describe the situation as an exodus there most certainly is an air of apprehension over current investments which I feel is likely to escalate.
Over recent years the Chinese have not suffered any loss of confidence in their economy and with double digit growth everyone has enjoyed a fairly profitable period. However, what will be interesting is how the Chinese react to the current situation, to reduced growth , massive redundancies and a general weakening of previously strong indicators. Chinese are very superstitious and extremely susceptible to emotion and as soon as they began to experience a drop in confidence we may see a run like nothing we have experienced in the West. We may well see an exodus.
My money is on a weakening Yuan over the next 12 months.