By REUTERS
Published: July 21, 2005
Filed at 7:42 a.m. ET

SHANGHAI (Reuters) - China scrapped the yuan's peg to the U.S. dollar
on Thursday and tied it to a basket of currencies, the central bank
said, the first steps in highly anticipated reforms aimed at letting
the currency float freely.


The new yuan rate versus the dollar revalues the currency by 2.1
percent, to 8.11 per U.S. dollar as of 1100 GMT, the central bank said
on its Web site (www.pbc.gov.cn).

Under the previous policy, the yuan was kept near 8.28 per dollar, a
virtual peg that had led the United States and other countries to
complain that China's currency was unfairly undervalued.

The changes came amid intense speculation that Beijing would overhaul
its currency regime, which had been basically unchanged since the
1997/98 Asia crisis.

As I understand it, this is a good thing for us...unless we buy a lot of Chinese-made items.

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