Dollar peg is dead as China vows yuan flexibility

[Modbert]

Good News Everyone!

Dollar peg is dead as China vows yuan flexibility | Reuters

(Reuters) - China on Saturday said it would gradually make the yuan more flexible, in a gesture that may deflect foreign criticism at next week's G20 summit, but will not quickly yield a big move by its currency.

U.S. President Barack Obama, who prodded China over the yuan in a letter released on Friday ahead of a Group of 20 meeting next week, welcomed the news -- remarks that indicate the danger of a market-roiling G20 confrontation has eased.

"China's decision to increase the flexibility of its exchange rate is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy," Obama said in a statement.

Other Western leaders and the International Monetary Fund also voiced encouragement that an important strategic ally was making a concession that improves the chances for a success at the June 26-27 summit.

China's dollar peg has come under intense fire from abroad as its export juggernaut roared back to life, while much of the rest of the global economy remained sluggish and beset by unemployment in the wake of the financial crisis.

China is blamed for keeping the yuan artificially cheap against the dollar, which has contributed to a massive trade surplus in China with the United States.

Thoughts USMB?

 

[CrusaderFrank]

Bush's fault

 

[Mad Scientist]

Dollar will fall against the Yuan therefore cost of Chinese products here in the US will rise.

Get ready for inflation.