In a major shift in economic policy, China announced that it will cease to peg the yuan to the dollar. This will open the market further, but not completely, as the "float" will be moderated, only allowed to fluctuate within .3 percent from the previous day. The initial move was accompanied by a 2.1 percent revaluation. A chronic complaint against China by trading partners has been that the undervalued yuan and peg to the dollar gave Chinese goods an unfair advantage. The NYT has an article with more details.
UPDATE: Krugma has an analysis what the float will actually do for the world economy.
Posted by binky at July 21, 2005 09:38 AM | TrackBack | Posted to Economics