Yuan Will Rise Gradually

The People’s Bank of China - the central financial institution of the People’s Republic of China – has announced in a statement on Saturday that it will allow gradual appreciation of the Chinese currency, the yuan (sign: ¥; code: CNY), or, as it is called by the Chinese, the renmimbi (the people’s currency).

The Chinese economy has been strengthened after the global financial crisis and, according to the central bank, it was time for further reform of the Chinese currency. The first decision like this came in 2005, when the Central Bank of China has allowed the yuan to appreciate compared to the US Dollar. The yuan rose 21 per cent until it was repegged to 6.83 in 2008 when the global financial crisis has begun.

The People’s Bank of China will set the value of the renminbi in relation to various currencies, and not just the American dollar. The appreciation will not be immediate.

The goal of this move is to preserve Chinese competitiveness on the global market and to preserve the jobs of millions of workers in the Chinese factories working for export.

The announcement of the Central Bank of China comes only a week before the world’s leaders gather at the Group of 20 and Group of 8 summits in Toronto, Canada.