"Valuing the yuan vs. a trade-weighted index would help China’s exporters stay competitive, one strategist says"
"On Friday, Chinese authorities announced the creation of three new currency indexes, one of which will value the yuan against a basket of trade-weighted rivals....it is reasonable to speculate that the creation of a trade-weighted index could be a first step toward a shift in how Chinese monetary authorities manage their heavily controlled currency, according to Greg Anderson, global head of currency strategy at BMO."
"Setting the yuan’s value against a trade-weighted basket — instead of setting it against the dollar like they do now — would “give [policy makers] the flexibility that if the U.S. dollar continues to appreciate, they can detach from it, which will prevent them from losing exports due to being uncompetitive,” Anderson said."
See:
http://www.marketwatch.com/story/why-china-may-want-its-yuan-to-be-more-like-the-singapore-dollar-2015-12-11?dist=beforebell
