Your $ is not going to far in future

[Willy The Londoner]

 
Your $ euro and Gb pound will not get you so much in China -  They are allowing it to float a little.  Get your trip in while it is cheaper.

Willy

Critics of China say the cheap yuan is giving exporters an unfair advantage China has indicated it will allow the yuan to rise against the dollar and other Western currencies.

The Chinese central bank announced it would make its exchange rate mechanism "more flexible", but it gave no details about the timing or extent of changes.

The yuan has been effectively pegged to the dollar, drawing criticism that China was protecting its exporters.

US President Barack Obama and the head of the International Monetary Fund (IMF) welcomed China's announcement.

The US had been particularly critical of Beijing, accusing it of keeping its currency artificially weak.

The yuan has been held at about 6.83 to the dollar since July 2008.

The Central Bank said the proposed exchange rate reform had been made possible by the global recovery.

Continue reading the main story China's decision to increase the flexibility of its exchange rate is a constructive step
Barack Obama
 But it appeared to rule out a major appreciation, saying there was "no basis for big fluctuations or changes".

The BBC's Damien Grammaticas says the announcement may be seen as an attempt to preempt criticism of China's currency policies at a summit of the G20 group of industrialised and developing countries next week in Canada, where Mr Obama will meet China's President Hu Jintao.

IMF chief Dominique Strauss-Kahn said the Chinese move was "a very welcome development".

Mr Obama said: "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."

Under pressure
 
The US and the IMF say the yuan is undervalued, which helps Chinese firms compete overseas and contributes to the large surplus in China's international trade.

China has kept the currency from rising by selling yuan for dollars and has built up massive foreign exchange reserves as a result.

The way China invested those reserves is seen by many economists as a key factor in the recent international financial crisis.

In April, the US treasury delayed a report that could label China a currency manipulator, in what was seen as an attempt to give Beijing time to reform its currency without appearing to do so under pressure.

A number of members of the US Congress believe the low yuan is directly affecting their local economies.

Reponding to the announcement, Senator Charles Schumer - one of the main congressional critics of China - said: "Until there is more specific information about how quickly it will let its currency appreciate and by how much, we can have no good feeling that the Chinese will start playing by the rules."

[Neil]

http://ca.news.yahoo.com/s/reuters/100619/n_top_news/cnews_us_china_yuan

There's another news story about it.  I don't think it's quite time to worry though. 

[Paul Todd]

Eye on Asia
Why China Probably Won't Revalue the Yuan Soon
 February 16, 2010

As China economy shows more signs of overheating, Goldman chief economist Jim O’Neil says Beijing is poised to allow an appreciation of its currency, the yuan, to slow the economy. O’Neil thinks the Chinese could allow the yuan to strengthen by as much as 5%. “I have a strong opinion that they’re close to moving the exchange rate,” he said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”

While there are solid economic reasons to move quickly, there are also some solid political reasons to stay put. The U.S. has been loudly calling for the Chinese to let the yuan appreciate. For instance, President Obama said in an interview with Bloomberg BusinessWeek, “China and its currency policies are impeding the rebalancing of the global economy, that’s necessary. My goal over the course of the next year is for China to recognize that it is also in their interest to allow their currency to appreciate because, frankly, they have got a potentially overheating economy.” The president is right, but China’s leaders are probably in no mood to give an inch to the U.S. right now. They’re still fuming over the arms sales to Taiwan, U.S. criticism of China’s Internet censorship and a meeting between Obama and the Dalai Lama that’s scheduled for Thursday. A change in currency policy now would be a big win for Obama – and might lead people in China and overseas to conclude that putting pressure on Beijing works. So even if a revaluation of the yuan is in China’s interest, it probably isn’t going to happen for a while.

Interesting stuff,worth keeping an eye on I think. I've read some reports that say they will revalue the yuan by up to 25%. I can't see that happening any time soon.

[shaun]

I did a little research yesterday and showed Peggy a translated copy of the first post.  It didn't set to well with her.  She said all it would do is hurt the Chinese people and things are already bad enough.  If China does this production will go down drastically because sales will drop thereby putting people out of work.

This is not a good thing and I do not think China will bow to it.  At least I hope not.

[Vince G]

SHANGHAI – China followed through Monday on its pledge to allow greater flexibility in exchange rates, but said an appreciation in its currency alone could not rebalance world growth as it urged world leaders to carry out more fundamental reforms.

By late Monday, the yuan was trading at about 6.8012 to the U.S. dollar in the spot market, strengthening from 6.8272 on Friday — as the central bank delivered on its weekend promise to give up the dollar peg imposed two years ago to help Chinese exporters cope with the global downturn.
For the past two years, Beijing has kept the yuan trading in a much narrower band around 6.83 to $1.

But analysts said the move was mainly aimed at countering criticism of Beijing's currency policies ahead of this weekend's summit of the Group of 20 leading economies and would not result in any significant shifts in exchange rates. The yuan is still subject to a 0.5 percent daily trading range, limiting potential volatility.

"The yuan will gain very soon, but definitely not much. It was more of a strategic maneuver to silence outside criticism," said Qian Qimin, a market analyst at Shenyin Wanguo Securities, in Shanghai.

[Paul Todd]

Just to add to Vince's post:- according to a Reuters poll conducted today.
The median forecast of 33 economists is that the yuan will end 2010 at 6.67 per dollar.

That would mark a rise of 2.4 per cent from the level that obtained before Beijing said on Saturday that it would let the currency start moving flexibly once again after pegging it near 6.83 for 23 months during the global financial crisis..Looking further ahead, the median forecast of 29 economists is for the yuan to creep up to 6.58 per dollar by the end of June 2011, compared with a 12-month NDF midpoint of 6.6275 .
The survey points to a rise in the yuan's value against the dollar of 3.8 per cent over the next year.
The limited appreciation reflected in the poll results chimes with the central bank's emphasis that the rise in the yuan, also known as the renminbi (RMB), would be gradual.
"With the balance-of-payments account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist," the People's Bank of China said in a statement on Saturday.

By mid-afternoon, the yuan had gained 0.35 per cent from its opening level as the PBOC allowed traders to drive the currency higher. But the Reuters poll suggests such a rapid rate of climb will not last long.
"Following this weekend's statement, the spot rate is likely to resume appreciation, but the pace will be very gradual," Qian Wang and Grace Ng, economists at JP Morgan, said.

"The pace of RMB/USD appreciation will likely be accelerated as the Chinese government gains more confidence in the resilience of the global economic recovery and a soft-landing of the domestic economy. We continue to expect RMB/$ to reach 6.6 by end of this year," they added in a note to clients.

[Axiom]

Fasinating stuff!  Thanks!

[ttwjr32]

another thing china is trying to do is to stimulate sales inside the country. lots of hard ticket items are dropping in
price, this weekend i bought an air conditioner for the bedroom for 999 rmb when a few months ago it was 1499

and i saw 42 inch lcd tvs for 2300 rmb this weekend all over GZ 

and all other appliances are at even all time lows so their trying to stimulate people to buy her also

[Okie_Rob]

Oh! Well !!  Can't quit now !!!

[Irishman]

Why oh why didnt I get married last November when I got 10.3 RMB to the euro instead of around 8 euro now and falling!!!!
Oh well, good things come to those who wait...it is still a little frustrating!

[ttwjr32]

what ifs what ifs isnt life full of these what ifs

[Rhonald]

Well Life does have at least one if in it 

[Willy The Londoner]

, this weekend i bought an air conditioner for the bedroom for 999 rmb when a few months ago it was 1499

Wow you really are hot stuff in bed then!!!!!!!

Willy

[Willy The Londoner]

I see the RMB has started its decline against the dollar.  First time it has dropped below the 6.80 mark since they pegged it two years ago.

Willy

[shaun]

Ted,

I don't know if anyone told you but after the first year of marriage things naturally begin to cool off in the bedroom.  You really didn't need to buy the air conditioner for that.  Hehe.