Move away from fixed dollar peg could lessen competition for U.S. firms, raise import prices.I must say that the timing of this is curious- so pay close attention to the markets over the next several weeks.
July 21, 2005: 7:43 AM EDT
NEW YORK (CNN/Money) - In a move that could trim the trade gap with the United States, China revalued its currency higher against the dollar Thursday and said it would no longer have the yuan tied to a fixed rate against the dollar.
The move, while small at this point, could be the first step to reduce competition for some U.S. companies from lower-priced Chinese imports. A stronger yuan could also increase the revenue U.S. exporters get from sales to the world's largest country, one of the fastest growing consumer markets.
It also reduces the threat that Congress could impose threatened trade sanctions on China.
On the downside for American citizens is that it could lead to increased prices for Chinese-made goods such as apparel and electronics.
--WP
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