Tuesday, March 22, 2005

Continuing Cracks - Part 7

Inch by inch. From the Daily Pfenning.

"Finally, a story was printed in the Beijing Daily yesterday which said China will change the yuan's peg from the dollar to a basket of eight currencies and widen the band in which it is traded starting in May. The Beijing Daily said, citing unnamed financial sources, that the government will allow the renminbi (yuan) to fluctuate in a range of between .6% to 1%. Currently the currency is only allowed to fluctuate .3% above and below the pegged currency rate. This is what we have thought China would do all along; ease the currency upward on a slow but steady appreciation using a basket of currencies to regulate its value. The timing is all that is left. We still think investments in other Asian currencies such as the Thai Baht, Singapore Dollar, or Japanese Yen are going to perform just as well if not better than investments in the Renminbi. I haven't been able to find any other stories on this, so take it as just another indication of what will eventually happen."

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