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People's Bank of China announces plans to reduce future currency manipulations
Howard Richman, 11/25/2013

I missed this article which appeared in Bloomberg on November 20:

The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.

“It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. Neither Yi nor Zhou gave a timeframe for any changes.

China’s foreign-exchange reserves surged $166 billion in the third quarter to a record $3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany, Europe’s largest economy.

 If the People's Bank of China follows through, then the following will happen in the United States:

1. The dollar would fall versus the yuan.
2. The U.S. long-term interest rate would rise.
3. The price of imports from China would rise.
4. Inflation in the U.S. would rise.

The U.S. would experience short-term financial problems. But long-term U.S. economic growth would be enhanced.