Dollar-Yuan: New Policy; Old Rate

First day of China’s newly re-instituted managed exchange rate regime was very much like the last day of the dollar peg it replaces. The People’s Bank of China left the yuan-dollar rate unchanged Monday–though we can’t say we were surprised. Days two through four, ahead of the G20 meeting next weekend, may bring some cosmetic appreciation in the Chinese currency. Thereafter we continue to expect the yuan to rise only slightly if at all against the dollar with the central bank continuing to be unbending in its flexibility.

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Filed under China-U.S., Economy, Markets

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