This week, China widened the Yuan’s trading band outright to +1% above or below the central parity rate (the PBoC fix before trading). Previously they had been using +0.5%. Against the EUR, GBP and JPY, the float is up to +/-3%. Optically, it is another step in the liberalization of the CNY exchange rate towards full convertibility. Fundamentally, it will take some of the pressure off China on allowing more CNY appreciation. It is supposed to be a well-timed political move that proves that reformists are in charge and continue to push forward key financial reforms. Currency flexibility can only be positive for ... (full story)