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
CREDIT-GRABBER: China said its coast guard rescued the crew of a fishing vessel that caught fire, who were actually rescued by a nearby Taiwanese boat and the CGA Maritime search and rescue operations do not have borders, and China should not use a shipwreck to infringe upon Taiwanese sovereignty, the Coast Guard Administration (CGA) said yesterday. The coast guard made the statement in response to the China Coast Guard (CCG) saying it saved a Taiwanese fishing boat. The Chuan Yu No. 6 (全漁6號), a fishing vessel registered in Keelung, on Thursday caught fire and sank in waters northeast of Diaoyutai Islands (釣魚台). The vessel left Keelung’s Badouzih Fishing Harbor (八斗子漁港) at 3:35pm on Sunday last week, with seven people on board — a 62-year-old Taiwanese captain surnamed Chang (張) and six
RISKY BUSINESS: The ‘incentives’ include initiatives that get suspended for no reason, creating uncertainty and resulting in considerable losses for Taiwanese, the MAC said China’s “incentives” failed to sway sentiment in Taiwan, as willingness to work in China hit a record low of 1.6 percent, a Ministry of Labor survey showed. The Directorate-General of Budget, Accounting and Statistics (DGBAS) also reported that the number of Taiwanese workers in China has nearly halved from a peak of 430,000 in 2012 to an estimated 231,000 in 2024. That marked a new low in the proportion of Taiwanese going abroad to work. The ministry’s annual survey on “Labor Life and Employment Status” includes questions respondents’ willingness to seek employment overseas. Willingness to work in China has steadily declined from
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
The number of pet cats in Taiwan surpassed that of pet dogs for the first time last year, reaching 1,742,033, a 32.8 percent increase from 2023, the Ministry of Agriculture said yesterday, citing a survey. By contrast, the number of pet dogs declined slightly by 1.2 percent over the same period to 1,462,528, the ministry said. Despite the shift, households with dogs still slightly outnumber those with cats by 1.2 percent. However, while the number of households with multiple dogs has remained relatively stable, households keeping more than two cats have increased, contributing to the overall rise in the feline population. The trend
RSS