China Throws in The Towel, Ends Dollar Peg

China claimed to be using a currency basket back in 2012, but now they will actually do it, being unable to bear further U.S. dollar (and thus CNY) strength.

This is the last booster rocket being separated from the USD rocket. Escape velocity is next.

WSJ: China’s Central Bank Signals Intention to Loosen Yuan’s Peg to Dollar

There are three baskets, with the U.S. dollar at 26.4% in the main index. Based on the weights in the index, the index (CNY) has increased 1.6% through December 12. It was up 2.93% at the end of November.

CFETS: Calculation Methodology of RMB Indices (PDF)

China can now launch a dirty float of the yuan, allowing it to depreciate while minimizing political criticism.

1 comment:

  1. And then when it blows past 9 they'll just up the weighting of the ZAR and Real!