China may widen yuan trading band soon - Bank of China

[hugolp]

Another baby step from China.

http://www.reuters.com/article/2011/...7HU10O20110630

China may widen yuan trading band soon - Bank of China

(Reuters) - China is "very likely" to widen the daily trading band of the yuan against the dollar in the near term, Bank of China Ltd said in a report on Thursday.

The country's largest foreign exchange lender said yuan reforms were "lagging behind" and flaws in the current regime had become more obvious.

Speculation has intensified in recent weeks that the central bank could widen the yuan's trading band to introduce greater currency flexibility to help rein in inflation.

The yuan can now move within a daily range of 0.5 percent up or down from a mid-point rate set by the central bank, but the currency has rarely approached those limits. (Reporting by Aileen Wang and Kevin Yao; Editing by Chris Lewis)

[swissaustrian]

They are announcing this right after they diversified heavily into euros:
http://www.zerohedge.com/article/its...billions-euros

[hazek]

I think if I were China and I knew I'm holding potentially worthless paper I'd do what ever I could to offload that worthless paper without suffering to heavy loses in the process. I'm mean if they suddenly went full out as Schiff likes to predict and refused to prop the dollar up anymore that would be it for their $3 trillion reserves and all the other paper assets. Instead they are trying to hide their true intention of getting out of this hole as much as they possibly can.

[YumYum]

I think if I were China and I knew I'm holding potentially worthless paper I'd do what ever I could to offload that worthless paper without suffering to heavy loses in the process. I'm mean if they suddenly went full out as Schiff likes to predict and refused to prop the dollar up anymore that would be it for their $3 trillion reserves and all the other paper assets. Instead they are trying to hide their true intention of getting out of this hole as much as they possibly can.

I think Project 60 pretty much lays out what China is going to do with their American dollars. They are going to buy up American real estate.

[Blueskies]

China is screwed. They will collapse just as badly as the US, perhaps even more-so.

How can anyone be a devotee of Hayek and not see this? Hayek's theory is that manipulating interest rates = depression. China has been the largest manipulator of interest rates the world has ever known.

Sure, they have productive factories, but they don't have the infrastructure to get the goods those factories produced to their own people. Retailers, shippers, things we take for granted here, mostly because we have the opposite problem: too much service sector.

They will let the yuan appreciate, their exports will collapse, and Chinese consumers will not be able to buy the products China makes for several years. The factories will have to re-tool to make things Chinese consumers want (not things American consumers want) and China will have to develop service-sector side jobs/companies to ensure that the Chinese people can actually consume what they produce.