Bye-bye dollar peg, hello flexible renminbi

After weeks of international pressure, the People's Bank of China, China's central bank, announced over the weekend that it will increase the flexibility of its exchange rate, fuelling expectations that it will gradually let the renminbi appreciate. The move comes after the renminbi has been effectively pegged at around 6.83 per dollar for almost two years.

The bank's rationale for the policy change is that The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. It is desirable to proceed further with reform of the renminbi exchange rate regime and increase the renminbi exchange rate flexibility. For a...