An interesting development...

China has made another interesting move...

China Drops Yuan's Dollar Peg, Will Let Currency Float in Band
White House Welcomes Move, Vows to Monitor Implementation

The Wall Street Journal 07/21/05
author: Michael M. Phillips
(Copyright (c) 2005, Dow Jones & Company, Inc.)

China announced suddenly its long awaited change to its currency policy, saying it will no longer peg the yuan to the U.S. dollar but instead let it float in a tight band against a basket of foreign currencies.

The yuan has been strengthened, effective immediately, to a rate of 8.11 yuan to the U.S. dollar -- compared to the 8.28 yuan it has been set at for more than a decade. The new trading regime will begin Friday, the government said in an announcement on state television.

The yuan will now be allowed to trade in a tight 0.3% band against a basket of foreign currencies, the government said. It didn't say which currencies. It said the central bank would announce the yuan's closing price each day, and that rate would be the midpoint of the next day's trading band.