| The implication of the methodology adopted for the Chinese basket is that the currency can appreciate (depreciate) by 0.3% a day versus the $. This is not, therefore, just a 2.1% reval, but a move that is potentially more open-ended. ie, it can appreciate - theoretically - by 0.3% a day. The implications are therefore much stronger than a once-off revaluation.
Technically, the new regime is called "crawling peg". |
RMB Finally Goes Strong