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China rules out major currency revaluation
Business Digest: The yuan will no longer be pegged to the US dollar, but will only be allowed to rise slowly
Hopes that China would significantly revalue its currency ahead of the G20 summit in Toronto this week have been dashed after the People's Bank of China announced that there was "no basis for big fluctuations or changes".
On Saturday China announced that it would no longer peg the value of the yuan to the US dollar - a policy it has followed for almost two years. The effect was to keep the value of the Yuan low, and make Chinese exports artificially cheap. But rather than allowing a major revaluation, the bank will maintain a 0.5 per cent daily trading band and will set daily reference rates for the currency to allow it to rise slowly against the dollar.
It is a similar tactic to the one it followed for three years before the credit crunch struck. During that time the yuan grew 21 per cent against the dollar.
Read a full report at the Sunday Telegraph. ·
