Investors may receive a surprise from the Chinese government this year if it decides to reevaluate the currency, which the Wall Street Journal argues is looking more likely:
Most economists have given up on China snapping the yuan’s peg to the dollar, which has persisted since the middle of 2008, as the emerging economic superpower has repeatedly rejected the idea.
However, the picture has changed somewhat this week, as the Chinese authorities have made it clear that they are determined to tackle early signs of overheating in the economy. Now, some heavyweight economists are starting to take the idea that currency strength could be a useful tool in that fight more seriously.
Speculation started to gather Tuesday, when the People’s Bank of China slapped tougher reserve requirements on its banks to pinch rampant lending, prompting market watchers to mull the chances of a straightforward interest rate rise.
