China Ends Yuan Dollar Peg, Shifts to Currency Basket – Yumi Kuramitsu
China ended its decade-old peg to the dollar and said it will let the yuan fluctuate versus a basket of currencies, responding to criticism from the U.S. and Europe that its currency was undervalued.
The new yuan rate strengthens the currency by 2.1 percent to 8.11 per U.S. dollar immediately, the People’s Bank of China said on its Web site. Until now, the yuan had been pegged at about 8.3 per dollar. The bank said it will continue to maintain a trading band of 0.3 percent.
The yen rose against the 16 most actively traded currencies and had its biggest gain against the dollar in 2 1/2 years. The yield on the 10-year Treasury note rose 5 basis points to 4.21 percent.
See also: The official statement by the PBoC.
Commentary: Surging economy undercuts China’s stance on yuan by Andy Mukherjee Bloomberg News, via The International Herald Tribune, and Revaluation: a double-edged sword for China by Xu Haihui, via The Financial Times.
This topic on the Web, via Google News.