From the WSJ (subscription required):
BEIJING -- China will allow the yuan to be traded over the counter for interbank spot forex trading starting Wednesday, the country's central bank said Tuesday.
China will publish yuan benchmark rates each trading day versus the U.S. dollar, euro, Japanese yen, and Hong Kong dollar, the People's Bank of China said in a statement on its Web site.
The new trading system is another step toward giving market forces a larger role in determining the value of the yuan, and making the market for the currency more flexible.
See here for my last post on the yuan.
China Daily sums up the developments for 2005 and looks forward to the new year. A slow, steady path to revaluation and more open exchange is definitely in the works. True, it's still pretty much a dollar peg, but these moves are significant as a signal. When it comes to their currency, China seems to be doing everything right at the moment. One can't help but expect another small revaluation to happen sometime soon. This summer, announcements of changes in the operation of the market were quickly followed by the small revaluation. We've had two pretty significant stories in the last few days. If there is another revaluation soon, it will be small. This is a story that will play out over years, but the next headline could always come at any time.
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