Will China Drop Its U.S. Dollar Peg?

Spread bets and CFDs on currencies should consider that China is thinking about dropping its U.S. dollar peg. For years, China's currency, the yuan, has been pegged to the greenback. Now, though, China is thinking of moving away from that.

Comments made by a central bank governor indicate that the yuan peg to the dollar is unusual, and that things may change. Additionally, other officials have expressed an interesting in eventually moving the yuan to a managed float currency. 

Any change, though, is likely to come very slowly. GFT's Kathy Lien reports in FX360 on the consequences of revaluating the Chinese yuan:

Although Chinese officials are concerned that a one off Yuan revaluation would endanger growth by making their export sector less competitive on the global market, there is no question that revaluation is on their minds. Even a mild revaluation would send the dollar sharply lower because the U.S. needs demand from Asia to fund its growing deficit.