The Yuan Needs to Drop

Bloomberg: China Should End Exchange-Rate Distortion, Ex-PBOC Adviser Says
"I don’t know why the PBOC is so obsessed with the stability of the renminbi exchange rate," said Yu, who was an adviser to the monetary authority from 2004 to 2006 and is now a member of the Chinese Academy of Social Sciences. “A flexible exchange rate will give greater impetus to China’s economic readjustment and growth paradigm shift."

...The significance of the SDR inclusion may have been exaggerated, Yu said.

"The inclusion is symbolic, though it should be regarded as a good thing," he said. "It will not have any significant impact on anything and it will change nothing unless the inclusion is a step toward more reforms of the international monetary system."
China's renminbi has to fall for the same reason a ball thrown in the air needs to fall. If the U.S. dollar falls, the yuan can maintain a semi-peg with the greenback, but if the dollar is about to break out, the yuan must depreciate versus the dollar. The SDR push is a political achievement and for China's internal politics it will be a significant achievement that may push forward reforms, but by itself, it is not a meaningful change for the currency.

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