When China doubled the renminbi’s trading band on Saturday, the central bank proclaimed that it was a move to let market forces determine the value of the long-controlled currency.
If that sounds familiar, it is – the People’s Bank of China said exactly the same thing in April 2012 when it last doubled the renminbi’s trading band.
The currency’s record over the past two years offers a cautionary tale about what to expect from this weekend’s band-doubling. Although indicative of China’s desire to eventually make the renminbi freely tradable, it will take more than a wider band for that to happen: traders and analysts say the central bank will have to step aside from managing the currency on a daily basis, something it has so far proved unwilling to do.