Yuan to free float?

[Iraqi Al Yahud]

http://story.news.yahoo.com/news?tmpl=story&cid=1503&ncid=721&e=10&u=/afp/20041001/ts_afp/us_china_economy_currency_forex

[RogerL]

That would be excellent news. Lots of currency experts considered that the intentional peg of the yuan to the dollar at an artificially low rate was responsible for sinking the dollar somewhat. A free-floating yuan should actually boost the dollar.

[dinar4me2]

OK that begs the question from someone new to the currency market. What does pegging a currency to another mean? How would pegging a currency to the dollar bring it down. One would assume that multiple currencies are pegged to the dollar, but how does one currency affect the other that much?

[minigirl]

Here is a very informative post by RogerL:

http://www.investorsiraq.com/showthread.php?t=348&highlight=pegging+basket+dinar

[mechtech]

Good article Roger.

Thanks for sharing it Mini.