China yesterday revalued its currency for the first time in about a decade, scrapping the peg to the dollar in favor of a basket of currencies.
The currency is now valued at 8.11 yuan to the US dollar compared to the old rate of 8.2765 yuan, effectively a 2 percent revaluation.
The move was effective from 7pm yesterday.
"From today, the [yuan] rate against the US dollar will appreciate by 2 percent," said the Web site of China's central bank, the People's Bank of China (PBOC). "One US dollar will exchange for 8.11 yuan."
Almost simultaneously, Malaysia scrapped the ringgit currency's peg to the dollar and said it would move to a managed float.
The dollar sank to ¥110.38 immediately following the Chinese announcement. It had stood at ¥112.50 before the move.
The PBOC also said it has scrapped the yuan peg to the US dollar and repegged the Chinese unit to a basket of trade-weighted currencies, but did not reveal what they were.
Previously, the foreign exchange trade center said it could include the Hong Kong dollar, the yen, the pound, the Swiss franc, the Australian dollar, Canadian dollar and the euro.
Non-US dollar currencies trading against the yuan will be allowed to trade within certain bands, the bank said without elaboration.
"The [yuan] currency rate will not be pegged only to the US dollar any longer, but according to the actual situation of China's foreign trade development, it will be pegged to several major currencies in a currency basket to give these currencies relevant importance," the PBOC said.
China's yuan has been pegged to the dollar at 8.28 since 1997.
The last time the Chinese government revalued it was in 1994 when Beijing devalued the currency by over 50 percent, from 5.70 or so to 8.30, from whence it moved up to 8.28 by 1997 where the authorities have held it ever since.
China has come under intense pressure from its trade partners, especially the US, to revalue the yuan in recent months.
On Wednesday, US Federal Reserve chief Alan Greenspan warned that Beijing's policy of pegging the currency to the dollar could cause "very serious" problems for the giant Asian economy.
This was largely because financial operations that China uses to support its currency require the central bank to accumulate "very large" amounts of US Treasury bonds, he said.
US officials have long argued the yuan's fixed exchange rate against the dollar has left the Chinese currency significantly undervalued, lifting Chinese exports, giving them an unfair advantage, and inflating the US trade deficit.
The trading band which allows the yuan to move 0.3 percent either side of the mid-point is unchanged, the central bank said.
The PBOC said that the move is aimed at solving a host of problems that the 11-year peg to the dollar had been causing on the back of China's recent economic expansion.
"The move is aimed at easing trade imbalances, boosting domestic demand and increasing Chinese companies' competitiveness," the PBOC said.
"It will also help to increase the independence of monetary policy, improve the effectiveness of financial controls, help maintain the basic balance of imports and exports to improve trade conditions, stabilize prices and cut corporate costs."
also see story:
Pundits say NT dollar is safe, for now
‘NO SECURITY RISK’: The Railway Bureau reassured the public that the technicians’ activities were limited to technical guidance and did not involve sensitive systems The Railway Bureau yesterday said it had invited eight Chinese technicians to assist with an airport MRT construction project. The bureau issued the confirmation after an Internet user said Chinese nationals had entered the construction zone of Taiwan Taoyuan International Airport’s Terminal 3 project. They asked why “individuals from an enemy state” were allowed access to such a major national infrastructure project, which raised serious concerns over Taiwan’s industrial safety, sensitive systems and information security. The bureau’s Northern Region Engineering Branch Office said subcontractor Taiwan Handle Industrial Co (台灣手把工業) of the Taoyuan airport MRT’s “Contract No. CU05 Project A14 Station Civil, MEP &
A US uncrewed surface vessel (USV) encountered multiple Chinese warships during an autonomous transit of the Taiwan Strait, US defense company Seasats said in a statement on Wednesday. Seasats announced that a Lightfish USV had completed the first autonomous transit of the Taiwan Strait. Over five days, the USV traversed the entire length of the Strait while constantly monitoring surface vessel traffic, the company said. The Lightfish encountered multiple Chinese warships, one of which was a Chinese People’s Liberation Army Navy (PLAN) Type 056 corvette, it said. The Chinese vessels were operating “well within Taiwan’s exclusive economic zone without transmitting their identity via the
Taiwan is still in the process of assessing the possibility of recruiting workers from Eswatini, the Ministry of Foreign Affairs said yesterday, adding that its goal is to help Eswatini upgrade its vocational training centers. If there are plans to recruit workers from Eswatini, safeguarding national security, protecting public health and ensuring the employment rights of Taiwanese would be prerequisites, Department of West Asian and African Affairs Director-General Yen Chia-liang (顏嘉良) told a news conference. Key considerations would also include filling labor shortages in specific industries, and fostering bilateral professional and technical exchanges, he said. Yen was asked about the progress of labor
The nation’s usually punctual high-speed rail system yesterday was hit by major disruptions after all scheduled services were canceled and replaced with three hourly trains offering only non-reserved seating, affecting more than 200,000 passengers. Preliminary findings indicate the disruption was caused by a faulty power module in a track switch control cabinet, Taiwan High-Speed Rail Corp (THSRC) said, adding that as a full system inspection could only be conducted after operations end for the day, a decision on whether normal service would resume today would be announced before the first train departs. During a routine inspection early yesterday, a switch signal abnormality
RSS