Clear information to tackle currency issue

In the run-up to a major policy decision in China, editorials by high-ranking authorities in major publications, as well as reports and communiques from official forums and meetings, almost always provide clues to what could happen. You just have to know how to read them.

That is easier said than done, at least for foreign media, whose struggle to anticipate China's policy moves has fueled much frustration - and even accusations that Chinese decision-making is secretive and unpredictable. This struggle is perhaps most apparent today in discussions about China's exchange rate.

Many investors interpreted last August's unexpected devaluation of the yuan by 1.9 percent against the US dollar - the first decline following years of steady appreciation - as a last ditch effort by the People's Bank of China to stave off an economic crash. They thus assumed that it was just the beginning of a protracted policy-induced depreciation. As a result, a wave of investors shorted the yuan, fueled exchange-rate volatility and drove a sharp increase in capital outflows.