Forex Blog: Currency Trading News & Analysis.

August 21st 2006

RMB trading becomes more volatile

Charting the value of the Chinese Yuan (RMB) against the USD reveals the currency is appreciating at a snail’s pace. When you add volatility to the chart, the story becomes less black-and-white. Over the last six months, the RMB has begun to test the limits of the .3% daily trading band imposed on it by China’s Central Bank. Now, the currency routinely gains or loses .2% in a single day. While the gains have largely been offset by losses, this is still a positive development because it shows China is slowly moving towards a point in which the Yuan is allowed to freely fluctuate against the USD. China is certainly not going to capitulate to western interests by drastically revaluing its currency; rather, it will continue to move slowly and test the waters, until it is clear that China’s economic and financial infrastructure can accommodate a floating currency. The Economist reports:

[HSBC] puts weight on a recent statement by …the central bank’s monetary policy committee, that China could cope with an annual appreciation of 5%. That’s slower than America would like—but about as fast as it can expect.

Read more: China’s currency- Ups and downs

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Posted by Adam Kritzer | in Chinese Yuan (RMB), Investing & Trading | No Comments »

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