China Hints at Yuan's Departure From Dollar Peg

LINK to article (http://www.cnbc.com/id/33850971)

China said on Wednesday it will consider major currencies in guiding the yuan, suggesting a departure from an effective dollar peg that has been in place since the middle of last year.

The reference to a new set of benchmarks for determining the value of the yuan holds out the possibility of a departure from recent practice, which has seen the currency held steady since mid-2008 around 6.83 per dollar.

Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange rate formation mechanism," the central bank said in a 46-page monetary policy report.

Prices going up at Walmart..

this is bad

this is bad


Not at all, this might actually be the best thing to come out of this current economic cluster. China has been holding it's currency down and artificially devaluing it for years. As a result it's been extremely easy to buy cheap products from China and it keeps the Chinese economy rolling full speed ahead at the expense of domestic products here in the US and elsewhere. But their inflation is starting to get out of control and they have an exploding group of Middle class and the Ultra rich while at the same time having an extremely poor agrarian class. This has caused a lot of problems especially for the poor because the standard of living is (or at least was) rising very fast over there causing some serious socio-economic issues, riots etc. Systemic corruption particularly at the local level there has only made things worse. Similiar changes are taking place in India as well.

China needs to finally take it's place in the world and allow their currency to fluctuate in the free market. They are the new South Korea, which was the new Japan etc. All countries with monster growth, an eventual increase in their cost of living (due to all of the outsourcing to them) and then the eventual beating they'll receive when their cost of living is so high that there jobs get outsourced to a poorer country with a lower cost of living and they are forced to adapt. Japans is still having issue. Rinse and repeat. The names may change but it's always the same pattern.