In a story primarily devoted to pressures on the Japanese yen, there was this from today's Financial Times:
The yen losses came even as the Chinese renminbi rose to its strongest close against the dollar since Beijing revalued its currency last week. The renminbi firmed to Rmb8.1080 to the dollar, from Wednesday’s close of Rmb8.1128.
Wednesday's close was a post-revaluation low for the currency, but it looks like the market is testing Chinese resolve. From Reuters:
The central bank intervened in the final minutes of trade on Wednesday to push the yuan to close at a post-revaluation low of 8.1128 against the dollar.
Dealers said it was trying to send a signal to the market that it did not want the yuan to appreciate further for now. To play down speculation of further moves, the central bank had posted a statement on Tuesday saying the revaluation did not mean there would be more adjustments.
But the Reuters story is all about laying the foundation for further reform:
China will let the market decide the level of the yuan in the wake of last week's revaluation, a senior central banker was cited on Thursday as saying, making comments consistent with Beijing's intention of eventually floating the currency.
In preparation for that step, Beijing planned to launch foreign exchange derivatives -- including options and futures -- though timeframes were uncertain, Wu Xiaoling, a vice governor of the central bank, said in an exclusive interview with the official Shanghai Securities News...
"The foreign exchange rates will move along with changes in supply and demand on the markets, and you cannot expect the central bank to control its fluctuations," Wu was quoted as saying by the paper, again giving no timeframe.
"So we will prepare to launch forex derivatives as tools for financial institutions and enterprises to control risks."
That would be a very positive development, as better tools for managing the transition to a more flexible exchange rate regime will lower the probability of big disruptions resulting. For now, the Chinese are talking the good game:
... money supply growth was returning to "reasonable" levels, [vice governor Wu] said -- implying Beijing would not ramp up efforts to cool the economy.
The country's M2 money supply grew 15.7 percent in the 12 months to June 30, slightly faster than the central bank's target of 15 percent M2 growth this year, while yuan loans rose 13.3 percent, Wu said.
"Both indicators have fallen to reasonable levels, indicating the central bank's stable monetary policies have attained their goals," Wu said. "So there should be no changes in the policies in the second half."