China says it will end the yuan/dollar peg

[pscot]

Geithner says vigorous easing would be great. China giggles behind its fan.

http://www.businessweek.com/news/2010-06-20/china-signals-end-to-yuan-s-peg-to-dollar-before-g-20-summit.html

China said it will allow a more flexible yuan, signaling an end to the currency’s two-year-old peg to the dollar a week before a Group of 20 summit.

The decision was made after the world’s third-largest economy improved, the central bank said in a statement on its website yesterday, without indicating a timeframe for the change. It ruled out a one-time revaluation, saying there is no basis for “large-scale appreciation,” and kept the yuan’s 0.5 percent daily trading band unchanged...

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[girl gone mad]

1. It's just talk..

with absolutely no action behind it.

Also, there's no guarantee that the yuan would rise if depegged. I think it could just as well decline dramatically.

[pscot]

2. The G20 is about to start.

They throw us a bone to keep us quiet about their trade imbalance for a week, then it will be back to business as usual.

[amandabeech]

3. What factors do you think would lead to a decline in the value of the yuan?

The conventional wisdom is that it would rise 20-40% if it were allowed really to float freely.

I'm truly curious about your thoughts on this.

[Statistical]

4. If it were truly depegged and floated on open makret it would rise.

However your are right it is talk. China has no interest in doing this and the US (leadership) has no interest in making China do it.

[golfguru]

5. This is a double edged sword

As the Yuan rises against the US dollar, our exports should rise.
However Chinese goods will cost more, and that will mean higher inflation.

[AtheistCrusader]

6. Didn't take long for their bluff to be called.

http://www.guardian.co.uk/business/2010/jun/20/china-changes-course-currency-revaluation

[pscot]

7. Moonwalking

Motion without progress. It makes Timmeh happy.

[CHIMO]

8. Numbers

They haven't seemed to say that they would leave it to float.

The US dollar has appreciated about 15% recently to the Euro.

China sell more goods to Europe than to the US.

So stop looking at a belly button.

Once they have made their currency a free floating currency, then they can buy up many resources in other countries at what they may consider dirt cheap. That then would send up prices.