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April 29, 2005    

Renminibi revaluation speculation continues

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by Brian Turner
Renminibi revaluation speculation continues

Speculation is increasing that China is coming closer to revaluing its currency.

If this happens, it is expected that other Asian currencies would strengthen because nations would be able to let their currencies appreciate without having to lose their competitiveness against China.

All this anticipation of an impending move by China was heightened Friday by a report in the state-owned China Securities Journal which said that the time was “ripe” for a revaulation of the renminibi.

Speculation grew even more when the renminibi briefly rose above the official valuation range in relation to the dollar, to Rmb 8.27.

Most analysts said that the move was likely either a glitch in the system or a rogue price, but some speculation circulated that Beijing had deliberately allowed the variation in the renminibi’s value in order to see what would happen to trade.

Still expert opinion remains divided on when Beijing would finally act on revaluation, with some saying it could come at any time.

Others, however, feel that revaluation isn’t likely before May 18, which is when foreign banks will begin spot trading foreign currencies in China.

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