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Historically, China has gone to great lengths to shield their currency, the yuan, from the global markets. To coincide with this, the Chinese governments have off and on pegged the yuan with the U.S. dollar. Recently China has made some mini-steps to hopefully open up their currency to outside markets. Last month they said that a handful of foreign banks could invest some of the yuan they hold offshore in local Chinese bonds. Another step was that China ended the peg to the dollar in June. Even though this de facto peg was supposedly removed in June, the yuan has only appreciated less than 2% against the dollar. If you look at historical data you can tell that volatility has increased between the two, but barely enough to even notice. Is China holding back a potentially huge export, their currency, for a particular reason? Many believe that the yuan is artificially being kept undervalued. What kind of pressures is this putting on other economies to devalue their currency, as discussed in a previous post in the series?