This basket of currencies, in other words, acted like a sexed-up money market fund.
In the longer term, the yuan needs to keep rising against a basket of currencies.
From that month until July 2008, Beijing permitted a managed float against an undisclosed basket of currencies.
For this reason, we believe that the peg to a basket of currencies will remain in place.
For 13 years, the baht was firmly pegged to a basket of currencies dominated by the greenback.
Japanese Finance Minister Miyazawa Kiichi proposed that Asian currencies be pegged to a basket of currencies, including the euro.
On June 19, China de-pegged the renminbi from the U.S. dollar, pegging it instead to a basket of currencies.
The currency now floats to a limited extent against a basket of currencies.
The investment, which also included a basket of currencies, worked on the thesis that the stocks would rise in value.
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The U.S. dollar index, which measures the exchange value of the greenback versus a basket of currencies, tumbled 0.624% to 74.068.
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They hope that China will eventually allow the yuan to crawl upwards, either against the dollar or a basket of currencies.
The Wall Street Journal Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at about 73.985 from about 74.021.
The value of sterling against a trade-weighted basket of currencies is now around 25% lower than in mid-2007, before the financial crisis began.
The warning has put pressure on the pound, which two months ago appeared headed for its strongest level against a basket of currencies in four years.
If Beijing can keep the RMB limited within the narrow range of the basket of currencies to which it is now tied, the damage will be contained.
Another alternative is a greater reliance on SDRs, the IMF's quasi-currency, which operates as a claim on a basket of currencies: the dollar, euro, sterling and yen.
On July 21st, China tried to allay some of the criticism by revaluing the yuan slightly and switching its peg from the dollar to a basket of currencies.
Only then should it consider whether to allow itself more flexibility by, say, linking its exchange rate to a broader basket of currencies and thus abandoning the precious currency board.
The bet against the dollar is buying the PowerShares DB US Dollar Index Down ( UDN), which moves higher tracking a basket of currencies including the euro versus the dollar.
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China made headlines on June 19 when it announced that it would release the yuan from its dollar peg and allow the currency to float against a basket of currencies instead.
Under a currency board arrangement, the central bank guarantees the redemption of all notes in circulation at a set exchange rate to the dollar or another foreign currency or basket of currencies.
He believes it is only a matter of time before OPEC decides to value oil in terms of a basket of currencies rather than the dollar, which could prove catastrophic for the dollar.
The International Monetary Fund concluded that the RMB was moderately undervalued against a broad basket of currencies, and said that the RMB was undervalued by between 5 and 10 percent as of July 2012.
Now, officials at the Swiss National Bank are considering what currency or basket of currencies would replace the euro as its reference point for the currency ceiling, according to a person familiar with the situation.
Switching the peg to a basket of currencies that included, say, the euro and yen as well would give the Gulf states a bit more protection against oil-price swings, but it is hardly a perfect fit.
The weak dollar has inspired a lot of rumor trading, including the idea that several Gulf states, along with Japan, Russia and China, are in talks to start pricing oil according to a basket of currencies.
Look for this pattern to continue in 2013 as China continues to wean itself from the U.S. dollar and to diversify its holdings to include a larger basket of currencies, as well as hard assets in Europe, the United States, South America and Africa.
Given this timidity, China could replicate much of the flexibility of a managed float by shifting the yuan's peg from the dollar to a basket of currencies, at the same time widening the band within which the yuan can fluctuate, say to 10% above or below the peg.
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The USDX measures the value of the US dollar against a basket of currencies that includes the euro, yen, pound, Canadian dollar, Swiss franc and the Swedish krona exactly the currencies that China is most likely including in its own basket and which are now appreciating as a result.
In July, American nagging helped persuade the Chinese to move the yuan from its dollar peg and peg it to a mixed basket of currencies, bringing a 2% revaluation in the process (though that has not stopped a Democratic senator, Charles Schumer, from threatening a 27.5% tariff if the yuan does not rise more).
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