Chinese currency Yuan or Remminbi has been rock solid until recently. This created carry trade of faking of exports, getting in foreign exchange and buying a rising renminbi. Now that the Chinese currency has dropped what happens?
William Gamble
There was one major emerging market currency that was not affected by the announcement of the taper last year. The Chinese renminbi also know as the yuan has never been affected by any move of the US Federal Reserve because it is not fully convertible. It is a creature of the People’s Bank of China (PBOC). While it does fluctuate, the PBOC has let it appreciate steadily since October 2010. That all changed in the middle of February.
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