So the ‘hammer’ finally hits today. People’s Bank of China annouced that it will revalue the Yuan (a.k.a RMB) immediately against US dollars by a 2.1% increase. The annoucement came quietly in the backdrop of noisy national security talks surrounding CNOOC’s takeover bit of Unocal. No leaks, smart moves!
Although some US congressmen labeled this as a ‘good start’. In my view, this is a significant development. Once you start loosen the grip, there is no way back!
Why do I care? Simple: because I have a lot of friends and relatives in China, and my family and I travel often to China. Now with this currency revaluation, my US income doesn’t afford me the purchasing power I used to have. I know 2% is small, but what if that number becomes 40% as the market seems to think so …