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China to free itself from US dollar PEG.... It is going down

 
RedSheDevil
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06/21/2010 01:13 PM
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China to free itself from US dollar PEG.... It is going down
Note in the article they will be pegging their yaun to a basket of currencies and not the US dollar.. while they are spinning it to be a good thing.. they are also pulling away from the US dollar to reflect the strength of theirs.. this currency basket.. hmmm global dollar we have been talking about for a while..

This is significant because the largest trading partner can easily say .. we don't take your dollar today Obamason..

Read the entire article I just posted a tidbit as per the trinity requests.


[link to ca.news.finance.yahoo.com]

After months of deadlock over how much major countries should sacrifice for the good of global stability, the United States and China have each taken small steps to rebalance the precarious state of the world economy.

"We can see the outlines of what could make Toronto a 'success'," said Wendy Dobson, co-director of the University of Toronto's Institute for International Business.

"The moves in China and the U.S. are in their own as well as the global interest."

Late Thursday, U.S. President Barack Obama sent a letter to his G20 colleagues presenting a medium-term plan to grab control of his country's ballooning deficit.

The goals are moderate, and analysts wonder if Obama will be able to turn the plan into a reality. But the fact that Obama made the commitment in a letter to the most powerful leaders in the world is significant.

Prime Minister Stephen Harper followed up on Friday by publicly suggesting standards for indebted countries to meet in order to bring their debts and deficits under control before it's too late.

Then on Saturday, China surprised the world by announcing it would stop pegging its currency to the U.S. dollar, and instead allow the yuan to fluctuate within a range tied to a basket of currencies.

Chinese authorities warned that the move would not result in an immediate major fluctuation of its currency. But they also briefed key G20 ambassadors as the move was being announced, to let the world know they were serious, sources say.

The Chinese announcement comes just days after officials warned harshly that they would not be pressured by an angry U.S. Congress into making changes to China's currency regime. The United States has long argued that the Chinese yuan is drastically undervalued, and serves as an export subsidy that destabilizes global trade.



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Indeed, China sought to dampen the celebrations on Sunday. Central bank officials posted a notice on their website saying they did not expect any major fluctuations although market watchers were still on edge, not knowing quite what to expect at market open on Monday morning.

Until Thursday night, expectations for the G20 Toronto summit were low.

The group has proven successful in the past, coming together to mitigate the effects of the global financial crisis by agreeing to a massive worldwide stimulus program.

But with the pressure of the global recession abating, countries were squabbling endlessly about how to best bolster their banking systems, prevent future bank collapses, and rebalance global growth over the long term.

Leaders and analysts alike feared that another crisis would be in the offing without commitments from the United States to control its spending and from China to encourage more spending and allow its currency more flexibility.
I really am not nearly as interesting as I should be but I certainly will try to find interest in nearly everything I can be. self quote.





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