China's Yuan Really Floating?

BEIJING, China (August 2) - China's Yuan closed at a post-revaluation high against the dollar for a third straight session Monday, with many dealers seeing increasing leeway to allow the currency to gain. Dealers say the People's Bank of China (PBOC) has been keen to give the impression that market forces are at work, by allowing creeping gains against the dollar. But no official strategy for dealing with the currency's daily fluctuations has appeared. Still, Beijing seems to be quietly giving the Yuan a longer leash, letting it move further from 8.11 per dollar, dealers said. In letting the Yuan trade higher and wider, the central bank appears to be taking deliberate baby steps towards the greater flexibility expected for its new system. But the Yuan has firmed only 0.07% since the revaluation. Announcing the revaluation, the central bank said it was switching to a managed float based on market supply and demand, with reference to a basket of currencies. The central bank has also said that the currency could move up or down as much as 0.3% per day against the dollar. But in the whole period since the revaluation the yuan has moved in a range only a third as big. (Source: Reuters)