China Money: Yuan rise seen certain, but not soon

Thu Nov 12, 2009 1:02pm GMT
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* Forwards show rising expectations of yuan rise

* Forward move comes after central bank policy report

* But no major change seen in currency level anytime soon

* Export recovery next year key to forex policy shift

By Karen Yeung and Chen Yixin

SHANGHAI, Nov 12 (Reuters) - Confidence is building that China is preparing to let the yuan appreciate again against the dollar but policy makers are expected to move slowly, which argues against any immediate market move for some months.

China has shackled the yuan tightly around 6.83 per dollar since the middle of last year, to help its exporters during the global downturn, stalling a rally in place since the currency's landmark revaluation in 2005.

Markets have started to factor in expectations that Beijing will have to unleash the yuan next year as a global economic recovery becomes more established and they received a nod towards a shift from the central bank's third-quarter monetary policy report, released on Wednesday.

However, market players said while China faces increasing diplomatic pressure to let the yuan rise against the dollar, domestic factors would determine when policy makers give the currency more rein.  Continued...

 
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