China announced on State TV that the Peoples Bank of China was going to allow fresh appreciation of the yuan, and undertake its bit for global rebalancing.

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Barclays currency strategists Peter Redward and Kumar Rachapudi wrote that the Chinese government tend to rev up appreciation of the yuan ahead of the annual US-China Strategic and Economic Dialogue, which will take place in Washington May 9 and 10.

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While most China watchers cautioned that a rapid appreciation of the yuan was not in the cards, the conventional wisdom was that annual increases of 5 percent could be expected.

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That means that, even with China allowing only a modest nominal appreciation of the yuan against the dollar, American firms are looking a lot more competitive than they were a few years ago.

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