Renminbi: Is China Pegging To The Dollar Again?

Pete Sweeney, Asia Editor, Reuters Breakingviews
06/23/2017

'China has changed the way it uses the basket of currencies, and 'a lot of people think China is now re-pegging to the Dollar.’

'A lot of people think China is now re-pegging to the Dollar' Pete Sweeney, Asia Editor of Reuters Breakingviews, told me in a recent interview.

But, what about China's basket of currencies that replaced the Dollar peg in 2016 to manage Renminbi value? Pete says...

The Dollar is the world's global currency, so pricing against a basket is a diplomatic cover to a certain extent to say, 'Look, our currency is falling against the Dollar, but we're tracking the Yen, the Ringgit, whatever,' so it makes the Chinese emphasize that they're part of a crowd, which is fair.

But, in operational reality, everybody cares about what the Yuan - the Renminbi - is doing with the Dollar, and that's the majority of transactions, so that's the exchange rate that counts. It's what Donald Trump cares about.

To learn how the China has changed the way it sets the daily RMB rates watch Pete's 5-minute interview.

Pete Sweeney, Asia Editor, Reuters Breakingviews