I see the following article of further disruption in currency markets at least partially related to the policy of pegging the Yuan.
Frangos, Alex, 2010. Tokyo pressures beijing on yen. The Wall Street Journal, Sept. 9.
This quote demonstrates the anxiety that the Japanese are experiencing;
"'I don't know the true intention' of China regarding its growing appetite for yen-denominated bonds, Mr. Noda said Thursday before parliament's upper house. He promised that Tokyo would 'closely cooperate,' with Beijing on the subject. 'We are paying close attention' Mr. Noda said."
The Chinese actions are strengthening the Yen and making Japanese goods more expensive in the US. This allows China to take greater market share on manufactured goods.
It China had a free float policy or their currency then the Yuan would appreciate against the US Dollar, giving Chinese citizens greater purchasing power while also increasing the cost of Chinese goods in the US. This would cause fewer Chinese imports in the US.
China is playing a dangerous game by pegging the Yuan and the entire global economy might pay the price through lower economic growth.
I plan on reading the transcripts from the US congressional hearing next week on currency exchange.
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