June 21, (PRINTWORDS NEWS) – In a drastic turn around, European shares climbed for the ninth session on Monday after China agreed to allow more flexibility in the yuan exchange rate. According to reports, in a span of two days when China announced that it will allow more flexibility in the country’s currency rate, its value sprung up against the dollar to its highest level. Soon after there has been a sudden increase in the Asian stock market.
Trade sources reveal that Hong Kong’s Hang Seng Stock Market index popped up 3% on Monday while Japanese Nikkei closed at 2.4%. Not only that, the currencies of Japan, Korea and Malaysia went up by 1-2%. According to the economists, the one day gain is the biggest in the last five years for China and also marks an important makeover in the country’s currency policy.
The Chinese authorities on Saturday announced to make the yuan exchange rate more “flexible”. Sources reveal that the Chinese Central Bank has announced that it would like to keep the yuan rate ‘stable’ and there won’t be any sudden revaluation of the currency. The stance taken by the Chinese authorities comes just before the G20 summit which is supposed to take place later this month.
The Chinese exchange rate policy had earlier has sparked market fears as the trade analysts say this move can turn into a possible trade war between China and U.S. The U.S. policy makers believes that the policy gives the Chinese exporters and undue advantage over the U.S. manufacturers.
China has been recently under pressure from the U.S. and the Indian government for its currency policy.
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