Investing.com - China widened the range in which the yuan can fluctuate against the U.S. dollar at the weekend, signalling it could accept more volatility for the exchange rate and challenge the perception that the currency is a one-way bet.
The People''s Bank of China said Saturday the yuan will be allowed to move 2% either side of the central parity against the dollar starting from Monday, doubling the previous 1% range.
China has pledged to make the yuan more flexible since 2005 when the currency was originally unshackled from its dollar peg and the country has a longer-term aim for a fully convertible yuan that was enshrined by the Communist Party at a meeting last November.
The government is committed to gradually dismantling China''s capital account regime, but foreign exchange reserves are expected to rise sharply again this year, from $3.8 trillion to well over $4 trillion.
The weekend move was the third since July 2005 and follows a widening from 0.5% in April 2012.