China’s central bank has further loosened its hold on the yuan, making a big move that gives teeth to a government pledge to move toward a more market-driven economy.
The People’s Bank of China announced Saturday that it would double the allowable trading range for the yuan against the dollar to 2% from a midpoint rate it sets every day.
The change, which is effective Monday, means the yuan will go up and down in value more than it has in the past.
While the move had been largely expected, as the yuan was already trading in the last month at a wider range than usual, the announcement remains significant for a government that has always tightly controlled the exchange rate to keep it at favorable terms.
In fact, it’s been nearly two years since the government broadened the yuan’s trading range.