Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co. in New York, comments on China widening the yuan’s trading band today to 1 percent from 0.5 percent.
He spoke in a telephone interview:
“This is just the appearance of giving away something that they really might not. They haven’t been using the previous 0.5 percent band anyway so it’s not as though they’ll suddenly let it move 1 percent.”
“Under Bretton-Woods, currencies were allowed to move 1 percent anyway. This is still a fixed-exchange rate.”
“It’s a political ploy with limited economic impact.”
“It’s not coincidental that they’re doing this before the G-20 and IMF meetings. China typically allows something to happen before an important meeting. The goal here is to keep their adversaries unbalanced.”
“The dollar is just one of the currencies they peg against, so that shows this move is intended for a particular audience.”
“This move by China won’t amount to much. Most people don’t expect the renminbi to move very much this year,” he said, referring to the yuan by its other name.
“We’re not expecting significant movement this year. We think it will be flat.”