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China Currency Update: New Signs Point to China Easing Yuan

Recent meetings and signs of increased cooperation between the United States and China have led to speculation that the Chinese government will ease restrictions on its currency.

Earlier this month, the U.S. delayed releasing a report expected to strongly criticize China’s currency manipulation.  Officials said they were hopeful upcoming meetings would yield positive results on the currency issue.  Treasury Secretary Timothy Geithner meeting with Chinese financial officials in Beijing have led to indications that the Chinese are prepared to allow their currency trade freely within larger parameters on global markets on a daily basis.

President Barack Obama and Chinese President Hu Jintao will meet one-on-one in Washington on Monday and are expected to discuss, among other things, the recent developments on currency valuation.  If this and other high-level meetings result in a substantive easing of China’s restrictive valuation of the yuan, which many experts feel is a primary cause of the United States’ trade deficit with China, the Obama Administration’s delay of the currency report will appear to have paid off.

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