According to the research paper, released by United Overseas Bank Ltd., the yuan has a strong chance to appreciate further this year to the total of 11 percent gain against the U.S. dollar in 2008.
The Chinese currency has rose 4.3 percent up this year already, as the government used yuan to fight the accelerating inflation. Suan Teck Kin of United Overseas Bank confirmed in an interview today the statement from the research paper PBoC will strengthen the yuan by about 7 percent before the years end:
The yuan is the now the most effective tool that the PBOC has to tackle inflation and trade imbalances.
Yuan may start to rise soon again, even before the Strategic Economic Dialogue between the U. S. Treasury and Chinese officials in June. Then there will probably be a pause during the Beijing Olympics, after which the currency may continue its gaining curve.
The renminbi (another name for the Chinese yuan) stopped appreciating in April and is still trading below its maximum levels USD/CNY rate closed at 6.9940 today. UOB is expecting this rate to reach 6.6 by the end of the year.
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