In fact, the trade weighted index for USD has increased from 85.2653 to 87.2376 from Jul 21 to Nov 18, by 2.31%. This means RMB has appreciated by about 2.31+0.33=2.64% against the trading partners of USA (using USA's trade weight).
Meanwhile, RMB has appreciated by 8.61% to the Yen and 6.42% to the Euro. China's trading partner is not the same as that of US. So I set out to make a simple calculation to see what the trade weighted exchange rate index has changed, using historic data from http://www.oanda.com/convert/fxhistory and http://www.x-rates.com/cgi-bin/hlookup.cgi, and trade weight estimate by Morgan Stanley. (some approx. is made by lumping "other countries" into the major currency zones as contracts for these trade partners use one of these major currencies. HKG and TWD were lumped into USD)
Trade Weight | % change | Contribution | |
| USD | 43.0% | 0.33% | 0.143% |
| JPY | 18.0% | 8.61% | 1.550% |
| EUR | 14.0% | 6.42% | 0.899% |
| KRW | 9.0% | 2.48% | 0.223% |
| SGD | 3.5% | 5.24% | 0.183% |
| MYR | 3.0% | 1.85% | 0.055% |
| GBP | 2.5% | 4.33% | 0.108% |
| RUB | 2.0% | 3.10% | 0.062% |
| AUD | 2.0% | 6.90% | 0.138% |
| THB | 1.5% | 2.00% | 0.030% |
| CAD | 1.0% | 0.12% | 0.001% |
| Total | 100% | 3.39% |
It turns out RMB (measured by China's trade weight index) has appreciated by 3.39%.
There is still one puzzle, that RMB is still effectively tied to USD. But some light might be shed on the puzzle if USD's trade weighted index decreases signifantly. The hypothesis is that RMB might not follow USD's decline, like a cart does not stop immediately if the horse that pulls it slows down since the rope slacks. This would effectively result in a direct appreciation of RMB over USD.
(Update Nov 30) However, such 'manipulation' with no discipline is dangerous, even if it is for a transition period. PBoC needs to set a (secret) target number and a clear set of rule in the transition period, to ensure no human decision is made, otherwise, the exchange regime will not be credible and it will invite disaster.
When China stuck with an objective peg. it was accused of manipulation. when it manipulated the x-rate, US said there is no more manipulation. Perhaps Snow and Bush were shown the table I did in their trip, and were asked, would you like us to manipulate or for us to leave it to a computer?
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