China raises the Yuan

This is good news. China’s central bank has detached the Yuan from the dollar and they are allowing it to float on the world market. (sort of) Since 1997 the Chinese currency has been pegged at a rate of 8.277 Yuan to the Dollar. This policy kept the Yuan artificially low making Chinese imports cheaper, and American exports more expensive.

This has been a major stumbling block in trade talks between the U.S. and China, and the recent move while not revolutionary, is a step in the right direction. However as I alluded to earlier the Yuan will not float completely free, the level of the Yuan is still determined by financial planners in Beijing and they have the ability to set the trading level wherever they choose.

I really would like Ted Bush to comment here seeing as that this is his area of expertise.