The Chinese yuan surged against the dollar after hints at more liberalisation
Thomson Reuters
According to Fast FT, it's one of the yuan's biggest single-day rallies since the currency peg against the dollar was removed 10 years ago. That's off the back of some positive noises about liberalising the use of the currency in the global financial system from the People's Bank of China.
It doesn't seem like that long ago that everyone was talking about Chinese devaluation, when the PBoC widened the bands within which the currency's allowed to trade earlier this year.
But that action and the policy line the PBoC is taking now are complementary. The Chinese monetary authorities want to be included in the International Monetary Fund's special drawing rights.
There's a good explanation of that from Citi's David Lubin here, but the short version is that the strict rules on the yuan's use - for example, that it can't be exchanged for other currencies easily - will be relaxed by the PBoC, though not fully abandoned.
The dollar has dropped by more than half a percent against the yuan:
Investing.com
However, it doesn't outweigh the devaluations seen this Summer, when the PBoC altered the bands in which the yuan was traded:
Investing.com
But that devaluation didn't change the general trend, which has been towards a much stronger yuan over the long-term. In fact, the yuan is the only major currency in the world that's strengthened against the dollar in the past couple of years:
Investing.com
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