Abet Chichi2

[bob3]

Decoupling could become the story of 2008

The Chinese government backed up its recent words with action, allowing the yuan to appreciate against the U.S. dollar in its tightly controlled foreign-exchange market at the fastest pace since Beijing ended its U.S. dollar “peg” in 2005. The yuan closed Chinese over-the-counter trading at a new high of 7.3175 against the dollar, up 0.37% from Wednesday’s close of 7.3444 — its biggest daily rise ever. Shortly before the close, the yuan hit an intraday high of 7.3131. “It’s a huge move,” said Win Thin, senior currency strategist at Brown Brothers Harriman. “I don’t think it’s in response to outside pressure, but rather to help China’s domestic situation and fight inflation.” The yuan’s gains came on the same day that Yao Jingyuan, chief economist of China’s National Bureau of Statistics, told a forum in Beijing that faster appreciation in the yuan is likely next year to help offset inflationary pressures from a weaker dollar and rising global commodity prices. – Lisa Twaronite, MarketWatch

http://blogs.wsj.com/marketbeat/