Yuan widening - does not seem to show change

The PBC  announced that there would be a widening in the range of yuan trading, but it dos not seem to have showed up in the volatility measures. Volatility has grown from Chinese new years lows, but you would be hard pressed to see anything different in yuan behavior. Chart information shows increases in daily ranges starting in mid-March, but without the announcement you may not have caught a policy change. Option volatility has hit the lowest levels in a year.

China has a five-year plan to increase currency convertibility. With wider bands, there should be less demand by the rest of the world to change the value of the yuan. In fact, if the bands are wider and there is less movement it would suggest the yuan is at its equilibrium level.

The yuan is still on the move to take a major lead in international finance. It will take time but it is coming.