Seems like they have budged an inch:
China bowed to months of market and political pressure on Thursday by revaluing the yuan by 2.1 percent and abandoning the currency’s decade-old peg against the dollar.
In a long-awaited move that it said would improve the running of the economy and give more play to market forces, the central bank said the yuan’s value from now on would be linked to a basket of currencies of China’s main trading partners.
Beijing had been under strong pressure from its trading partners, especially the United States, to abandon the yuan’s peg of 8.28 per dollar, which they said undervalued the currency and handed Chinese exporters an unfair advantage on world markets.
The new rate, initially, will be 8.11 yuan per dollar, well short of the 10 percent revaluation that Washington had been seeking to head off protectionist pressure in Congress.
A start.
J. Michael Neal
The big news isn’t the revaluation; it’s the switch away from an exclusively dollar peg. That’s going to mean a much smaller Chinese appetite for dollars It may also cause other Asian central banks to reduce their dollar exposure.
Aaron
No, not necessarily.
They buy US T bonds to sterilize their reserves….if they keep exporting, they have to keep buying. It’s got nothing to do with their basket of currencies.