China's currency strengthens

Biggest one-day move since 2005 hints that China may allow gradual rise in renminbi

The yuan strengthened on Monday to its highest level since 2005, the New York Times reports. Its increase was a result of Chinese officials saying on Saturday that they would reform the exchange rate and enhance flexibility. Previously, China had not allowed its currency to move up as it maintained a competitive advantage exporting its goods abroad. However, it is yet to be seen whether Chinese authorities have committed to changing currency policy or whether this was a move to diffuse criticism about China’s currency before the G20 summit. “The renminbi is a political tool. Clearly the timing of the move was politically determined. It is not an economic tool yet. This will take years, not days or weeks,” said Bill Belchere, a global economist at Mirae Asset in Hong Kong. Analysts say in the long term, yuan appreciation would benefit the world economy.

New York Times