Relative value after the peg

- By FX Markets Staff
- @FXMarkets_
- 25 Jul 2005

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BACKGROUND: China's decision to allow some flexibility in its currency marks the first significant change since the mid-1990s. The 2.1% revaluation against the USD and the move to a trade-weighted basket marks the beginning of a gradual appreciation trend. Investors are still facing a major event risk. The Chinese authorities may well want to assess the impact of this small change on exports before deciding on another move in USD-CNY. The authorities are likely to have a trend appreciation bias

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