Malaysia is demolishing the Pudu Jail's walls, announced that they will adopt a flexible currency exchange regime, ending more than 2 years of pegging with USD. China
have been criticized for manipulating the currency market, by keeping its Renminbi / Yuan low, in order to make Chinese products more competitive, creating a wide global trade imbalance. Specifically, U.S is pointing its finger towards China China for causing economy problems which could not be solve. However, US keeps on denying and refuse to let Yuan appreciates against USD. China
Why suddenly change now?
In my opinion, I summarize it into 3 main reasons as below:
1. G20 Summit is holding its meeting this week. Again,
would face an axe from world leaders talking about the same old issue – Renminbi. In order to avoid it, just before the meeting, China announces they will adopt a more flexible stance. China
2. Inflation was the main concern for
China is always on the look out for investments, from US Treasuries to Commodities; is more active than before given its superb surplus for the past few years. Going forward, China Europe’s assets may falls into their investing radar. And by having a stronger currency, can buy more assets at cheaper price. China
* Do not surprise if you saw many Chinese in
Europe next few months.