Today's Rumour: PRC to Widen RMB Trading Band

♠ Posted by Emmanuel in at 4/06/2010 06:41:00 PM
There really isn't much to add here as commentators believe a "grand bargain" is underway wherein the US will not label China a currency manipulator in exchange for a resumption of a wider trading band for the currency as well as better cooperation on matters such as Iran, North Korea, and so on. From the FT:
China has begun to prepare the ground publicly for a shift in exchange rate policy, days after the US Treasury said it would postpone a decision on whether to name China a “currency manipulator”.

A senior government economist told reporters in Beijing on Tuesday China could widen the daily trading band for the renminbi and allow it to resume the gradual appreciation it halted in July 2008 in response to the global credit crisis. Ba Shusong, deputy director-general of the Financial Research Institute at the Development Research Center, the cabinet’s think-tank, said the timing of any shift depended on the pace of economic recovery in both the US and China.

Speaking at a press briefing organised by the Foreign Ministry, Mr Ba said the current peg was a temporary emergency measure that would be abolished at some point.
UPDATE: Apparently, Geithner is now going to China after a two day visit to India to talk things over with Vice Premier Wang Qishan. It's more behind-the-scenes jockeying as these meetings will be conducted behind close doors.