China’s central bank on Saturday doubled the trading band of the yuan, news reports said, a move that will allow the currency to fluctuate within a 2% band on either side of a rate set each day by the bank. The move isn’t a big surprise, but it is viewed as another significant step toward a freer-floating currency at the same time concerns are on the rise over a possible credit crunch and a slowdown of the world’s second-largest economy.
A stronger yuan makes Chinese exports more expensive to foreign buyers. Heavy inflows of foreign funds also contribute to soaring prices for property and other assets, stoking bubble fears.It also comes at a time when a weaker yuan has been tied to a sharp drop in copper prices, which has also amplified worries about the stability of China’s financial system.
A stronger yuan makes Chinese exports more expensive to foreign buyers. Heavy inflows of foreign funds also contribute to soaring prices for property and other assets, stoking bubble fears.It also comes at a time when a weaker yuan has been tied to a sharp drop in copper prices, which has also amplified worries about the stability of China’s financial system.