Yuan picks up steam

In the last two months, the Chinese Yuan has soared by nearly .6% against the USD. Compare that with the 1.2% that the Yuan appreciated in the prior 10 months, and an interesting picture begins to emerge: is China finally relaxing its control over the Yuan, allowing its value to be determined by market forces? The short answer is ‘no,’ but the long answer is ‘yes.’ Specifically, the last two months represent a sop to international
economists and western politicians, who have hinted that China’s failure to continue ‘revaluing’ its currency would bring about negative consequences for its economy. While China is nowhere near letting the Yuan float freely against the basket of currencies it is currently pegged to, the last two months were certainly a small step in that direction. The Shanghai Daily News reports:

“The central bank is likely to follow up with …faster yuan appreciation through widening the yuan/dollar trading band, said the chief economist at Goldman Sachs Asia.

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