Yuan Hits New High Against the US Dollar

The Chinese yuan is under 8 yuan to a dollar now. And the first time it went under 7.89.

Traders are calling this a psychological milestone and economists are wondering if a stronger yuan is going to produce a reduction in the trade deficit.

The answer is "no."

The US will still buy more from China than they sell.

The People’s Bank of China, VP said China will gradually let the market play a greater role in setting exchange rates – in line with the 0.3 percent permissible daily fluctuation rate.

But will it make a difference in the trade deficit?

Nope…I don’t think so.

What do you think?