The People’s Bank of China (the POBC) announced on 19 June 2010 that the renminbi (RMB) was to exit the peg to the US dollar. China will now determine its exchange rate with reference to a basket of other currencies.

However, hopes for the revaluation of the currency were frustrated, as on 21 June 2010 the PBOC fixed the daily mid-point for the RMB against the US dollar at the same rate as that on the 18 June 2010 (before the announcement). Notwithstanding this, the RMB finished at its highest level against the US dollar since July 2005.

Asia Insurance Review reports that Chinese insurance companies, such as China Life Insurance Company Ltd and Ping An Insurance (Group) Co of China Ltd, should benefit as RMB revaluation is expected to boost China’s domestic A-share stocks (which, according to Reuters, account for a large proportion of their investment portfolios). The Financial Times warned, however, that economists expect that China will only allow a gradual revaluation of the RMB against the US Dollar in order that the country’s exporters’ profits are not harmed.