You're The Yuan That I Want

The Chinese central bank really wants to delay the appreciation of the yuan, and if they can, do it in small increments. However food prices and other similar inflationary pressures have been hitting home very hard across many countries, China is no exception.

The psychological 7 yuan to the dollar has been broken and the quantum for appreciation is now heightened. I have mentioned recently about the close ties between the Chinese central bank and Bank Negara. I guess both currencies are very similar in having the most foreign reserves backing per currency in circulation. Bank Negara could be afraid that the yuan has more things in similarity with the ringgit - however, traders would speculate in the ringgit as a proxy play as it is "easier" and has better convertability in global markets.

Hence I stick to my view that the ringgit will walk in lockstep with the yuan for the forseeable future.

p/s photo: Cheung Yuk San