Sunday, 7 August 2011

China signals that floating the Yuan may become an option.

China allowed the Yuan to sharply rise 0.24 % today against the US dollar, to its own hurt, sending a warning signal to the US.   Chart below shows the abrupt move.  A Yuan, fully-unpegged from the US greenback. would be a step towards a new reserve currency.  Zero Hedge 

Chinese Yuan, opening August 8th.
Would you trust the currency of a people that saves over 50% of GDP? China has determinedly kept the Yuan low to help exports, although this year's Big Mac Index suggests it is not as undervalued as protectionist US politicians think.

Update August 9th: "China doesn't rule out normal market operations" "China considers allowing private companies to purchase foreign exchange with the yuan" " How does that work without China floating the Yuan? Precisely."

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