China Signals That It May Allow Currency to Rise Against Dollar

[D-Mack]

China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.

In its third-quarter monetary policy report, the People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.


"Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange-rate formation mechanism," the central bank said in a 46-page monetary policy report.


The comments, published just days before a visit to Shanghai and Beijing by U.S. President Barack Obama, set out the possibility of a return to exchange rate appreciation that began with a landmark July 2005 revaluation.


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http://www.cnbc.com/id/33850971

Mor fun for the Obama visit

[jtabeb]

Re: China Signals That It May Allow Currency to Rise Against Dollar

China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.

In its third-quarter monetary policy report, the People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.


"Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange-rate formation mechanism," the central bank said in a 46-page monetary policy report.


The comments, published just days before a visit to Shanghai and Beijing by U.S. President Barack Obama, set out the possibility of a return to exchange rate appreciation that began with a landmark July 2005 revaluation.


..
http://www.cnbc.com/id/33850971

Mor fun for the Obama visit

"Squirrel!";)

[D-Mack]

Re: China Signals That It May Allow Currency to Rise Against Dollar

"Squirrel!";)

World Bank: yuan to become alternative reserve currency

[cobben]

Re: China Signals That It May Allow Currency to Rise Against Dollar

More to the point, if the yuan is allowed to move up against the $USD, say +10%, does that mean that the yuan goes up +5% against the EUR and the $USD goes down -5% against the EUR?

Does this tank the equity markets (because China becomes less competitive), or rally them (because US becomes more competitive)?

[Fiat Currency]

Re: China Signals That It May Allow Currency to Rise Against Dollar

More to the point, if the yuan is allowed to move up against the $USD, say +10%, does that mean that the yuan goes up +5% against the EUR and the $USD goes down -5% against the EUR?

Does this tank the equity markets (because China becomes less competitive), or rally them (because US becomes more competitive)?

Excellent question. I wish I knew the answer.

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