RMB may gain 7 percent by end-2005: JPMorgan Chase
Media speculation on the Chinese currency revaluation has now turned to guessing when and at what rate the Renminbi will float.
According to a Reuters report, the bank JPMorgan Chase said Monday that the yuan could gain 7 percent against the U.S. dollar by the end of 2005 if allows the currency to trade in a wider band as early as this June.
"All signs are consistently pointing to a near-term yuan revaluation. Fundamentals have been demanding a move for sometime, and the strategic environment is also pointing to an opportune time for change", the bank's Asia currency strategist Claudio Piron was quoted as saying on Monday.
Before the May Day holidays, there was wide speculation in the Chinese stock market that the government would loosen control over its decade-old foreign exchange regime.
The central bank quickly ruled out the possibility of currency policy change.
"As far as we know, there's no adjustment expected in the yuan exchange rate," Bai Li, spokesman for the People's Bank of China, told Dow Jones Newswires on April 29.
China has kept the yuan in a tight range near 8.28 per dollar since the 1997/98 Asian financial crisis.
Analysts are now placing their bets on next possible date for the currency policy change.
China's Foreign Exchange Trade Center, an affiliate of the forex regulator, said last month that it would launch trading in eight new currency pairs on May 18.
Such a move could be an optimum timing for the currency reform, according to analysis by Goldman Sachs earlier this year.
It is considered by the center that an active forex market will help the government to improve its policy decisions on the reform of the yuan exchange rate system and serve as a test platform for the yuan's full convertibility.
Source: CRI news
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