Sooner or later, it was going to happen, and on July 21st it did. China abandoned the 11-year-old peg of its currency, the yuan, at 8.28 to the dollar. From now on, the yuan will be linked to a basket of currencies, the central parities of which will be set at the end of each day. And the currency has been revalued, although by nothing like as much as America and others have been demanding: the yuan's central rate against the dollar was shifted by 2.1%, to 8.11. As The Economist went to press, it was not clear exactly how the new system would operate. The Chinese called it a "managed floating exchange-rate regime", which may well imply more management than floating. The fact that the Chinese have acted at all is important. But the eventual economic and political effects of the revaluation will depend on how far and how fast the yuan moves from now on.
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