China permitted the biggest gain in the yuan since ending a peg to the dollar in July last year, a day after allowing the largest decline, suggesting the central bank is easing controls over the exchange rate.
The yuan rose as much as 0.24 percent against the dollar today, as 13 of 15 leading Asian currencies climbed. The central bank on Aug. 9 said it would allow more “flexibility” in the new system, which allows the yuan to float with reference to currencies of leading trading partners.
Allowing larger swings would help ease tensions with the U.S. and Europe as long as it results in a stronger yuan, which has advanced only 1.5 percent against the dollar since the currencies were de-linked. Lawmakers in the U.S. blame the exchange-rate policy for a flood of cheap Chinese imports, lost manufacturing jobs and the nation’s record trade deficit. [Full Text]