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China: Currency to Float?

You are here: Home / Blog / Foreign Affairs / China: Currency to Float?
22
Jun
The news that the Chinese currency might float - there appear to be slight nuances in interpretation between the Mandarin version and its English translation of the press release - augurs well if this leads to a re-evaluation of what the Yuan is worth. Most western commentators reckon that the currency has been held down artificially to make Chinese exports even cheaper. 

However, given that the Central Bank of China holds $3 trillion in reserve, it is unlikely that the Yuan will move much. Caution was invented by the Chinese three thousand years go.

The real interest in the market will be - once China has full status at the World Bank and IMF - (but don't and please no laughing at the back, don't bank on it) is whether she ill enter the US Bond market sometime soon to offload some of those $$. That would put the cat amongst the pigeons and could cause the $ to fall by as much as 25%.  


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