The Chinese Currency To Weaken?

Fullermoney is really full of good information today. A highly recommended site. I am only going to mention one of the articles which takes its beginning from a Bloomberg article about the move in the Chinese currency yesterday.

Dec. 2 (Bloomberg) -- China’s yuan traded near a five-month low on speculation the central bank favors a weaker currency to support exporters, two days before U.S. Treasury Secretary Henry Paulson visits Beijing to push for further appreciation.

The People’s Bank of China set the reference rate at 6.8527 per dollar in Shanghai, compared with the previous fixing of 6.8505. The currency slid 0.7 percent yesterday, the biggest loss since the central bank ended a fixed exchange rate in 2005.

I believe the Chinese have a real problem. They have been allowing the Yuan to appreciate slowly against the dollar but, the rapid move of the dollar to the upside against practically all currencies other than the Yen means the Yuan too has gone up very strongly against Europe (almost 30%). I suspect they want to find a middle ground between the dollar rate and the European currency rate to aid the Chinese Exporters.