A day after China said it would begin to allow their currency, the yuan, to have a more flexible exchange rate, Chinese officials walked back the pledge, saying the yuan would remain stable. Since mid-2008, the yuan has remained at an essentially stagnant rate pegged to the U.S. dollar, a move that helped China stabilize its economy during the economic crisis but has since drawn international criticism. Analysts say that pegging the yuan undervalues the currency, giving Chinese-made goods a competitive advantage in the international marketplace. The promise to allow more flexibility was seen as an attempt to defuse criticism ahead of the G-20 summit next weekend. Calling the yuan “the people’s money,” the People’s Bank of China said it would stay at a “reasonable, balanced level” to maintain economic stability.
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