China has set the renminbi-dollar exchange rate at its highest level in five years, after announcing it would make its currency more flexible.
The exchange rate is now 6.7975 renminbi to one US dollar; the highest level since July 2005.
US Treasury Secretary Timothy Geithner previously hit out at China for refusing to remove its peg to the dollar.
The US had accused Chinese officials of being "currency manipulators" and keeping the renminbi artificially low to benefit exports.
This led to President Obama's administration ramping up the pressure on China to unpeg its currency
When China said it would allow greater flexibility for the renminbi earlier this month, President Obama welcomed the move, saying: "China's decision to increase the flexibility of its exchange rate is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy."
The peg was last removed between 2005 and 2008 but was then reintroduced in the midst of the global financial crisis.
See this week's Alchemist column in Investment Week for analysis of China dropping the dollar peg.
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