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China agrees to yuan flexibility

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China agrees to yuan flexibility

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China has announced it will gradually make the exchange rate mechanism for its yuan currency more flexible.

The Chinese Central Bank says the move is in light of better economic conditions at home and abroad.

The US, the IMF and EU countries have welcomed the news.

Observers say Beijing is indicating that it is ready to end what is described as the yuan’s defacto peg to the dollar.

Critics say an undervalued yuan gave China an unfair trade advantage, but Beijing says it had to protect itself from the global recession.