NEW YORK (CNNMoney) -- China is allowing U.S. currency traders to have a crack at its tightly controlled currency, the yuan, but analysts say the move will have more impact on international politics than markets.
"It's a peace offering to the rest of the world," said Dean Popplewell, chief currency strategist at the Toronto office of the Oanda Corp., a currency trading services company.
The announcement comes just one week before Chinese President Hu Jintao is expected to visit Washington on Jan. 19, and China's currency controls will likely be high on the agenda.
"Most individuals from the dealer side see it more as a political move ahead of Washington next week, some type of appeasement to take the spotlight off the yuan itself," Popplewell said.
While the yuan is already traded by U.S.-based traders through Hong Kong markets, this is the first time the government-controlled Bank of China is allowing U.S. customers to buy yuan directly. Traders will be able to withdraw up to $4,000 worth of yuan per day from Bank of China's New York City branch, at a maximum of $20,000 per year.
But the move is not expected to have much of an effect on the yuan's value.
"It's a sort of a first step but I would imagine it's a political move more than anything," said David Morrison, market strategist at the currency trading company GFT in London.
"Every time the U.S. government has gotten close to calling the Chinese a currency manipulator, China has done something to put the U.S. on a back foot. This is really a very, very minor concession to dampen down the anti-Chinese rhetoric about manipulating their currency."
Treasury Secretary Timothy Geithner on Wednesday said China must do more to address its undervalued currency. The Chinese government has been accused of artificially pegging its currency to the dollar, rather than allowing it to trade freely, in order to keep its exports cheap.
"We believe it is in China's interest to allow the currency to appreciate more rapidly in response to market forces," said Geithner.
Morrison said the yuan is worth more on Wednesday, with the U.S. dollar worth 6.6128 yuan, compared to the close on Tuesday, when the dollar was worth 6.62 yuan. If the yuan's value continues to rise, then traders could benefit.
"We fully expect continued [yuan] appreciation, and note that the yuan has been very strong this week after a weak start to the year," wrote Win Thin, global head of emerging markets strategy for Brown Brothers Harriman, in a note to investors. "The yuan often sees outsize gains just before major summits, and so gains are likely to continue over the next week."
But analysts said it's unlikely that U.S. traders will be able to impact the value of the Chinese currency if Beijing is still holding the reins.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.45%||4.47%|
|15 yr fixed||3.89%||3.90%|
|30 yr refi||4.45%||4.46%|
|15 yr refi||3.88%||3.88%|
Today's featured rates:
US Starbucks stores are bugged by drinks no one wants, too many stores and not enough innovation. More
OPEC members are meeting Friday in Vienna to consider a potential production increase that would please its customers and help ease prices. More
Russian trolls posing as an American college student tweeted about divisive social, political and cultural issues using an account that amassed thousands of followers -- and appeared in dozens of news stories published by major media outlets -- as recently as March. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
Thinking of splashing out a lot of money on fancy new car or dream vacation? Ask yourself these six questions to avoid financial chaos. More