China revalues renminbi | FT
"symbolically the move is significant in its own right.....It shows a willingness by China to fit in more on the world economic stage." - David Brown, Chief European Economist at Bear Stearns
The yen jumped sharply against a range of currencies following the announcement by the People"™s Bank of China that it would revalue the renminbi, following pressure from leading industrialised countries.
The PBOC said it would re-peg the renminbi to Rmb8.11, from Rmb8.2765, and it would adopt a currency basket for managing the currency.
The trading band in which the renminbi would be allowed to fluctuate stayed the same, at 0.3 per cent on either side of the new central level.
The Japanese currency rose on market expectations that a stronger renminbi would mean other countries in the region would be prepared to let their own currencies strengthen too.......
Shortly after China"™s announcement, Malaysia said it would alter its peg and allow the ringgit to fluctuate freely and Singapore, whose currency is tied to a trade-weighted basket of currencies, was also due to make an announcement.......
Chris Towner, currencies strategist at HIFX in London, said: "œThis is China trying to walk a very fine line between protecting their economy and responding to political pressures, notably from the US."
"œBecause the revaluation is less dramatic and because it is gradual, the market reaction is not as great," Mr Towner said. "œThe last thing the Chinese want to do is damage their economy."
The dollar was generally weaker as investors wondered whether further moves towards free-floating currencies in the region would affect the appetite of Asian central banks for dollars. As part of interventions to weaken their own currencies, banks in the region have been heavy dollar buyers.......
from FT
What did I say then?
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