China's renminbi exchange rate reform will be a gradual process, but its impact on the markets has already been felt.

The central parity of the renminbi to the U.S. dollar reached 6.7980 on June 22, a substantial appreciation of 0.43 percent over the previous day, the highest since China unpegged the yuan to the U.S. dollar in July 2005, according to the China Foreign Exchange Trading System. But on June 23 the yuan slipped to 6.8102 against the U.S. dollar.

The People's Bank of China, the central bank, announced on June 19 that it will push forward renminbi exchange rate reform, but ruled out the possibility of a one-off revaluation.

The announcement boosted other Asian currencies against the dollar, and sent stock prices up around the world. On June 21, stock indexes in Hong Kong, Germany, Tokyo and France rose by between 1.6 percent and 3.1 percent. The benchmark Shanghai Composite Index closed up 2.9 percent as investors bid on stocks of Chinese airlines and metals firms, whose costs for imported fuel and iron ore would be lower if the yuan gains value.

The international community welcomed the reform. The move "will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer." said Dominique Strauss-Kahn, Managing Director of the International Monetary Fund.