Renminibi revaluation speculation continues

Story link: Renminibi revaluation speculation continues

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

This speculation grew even more widespread when the renminibi briefly rose above the official valuation range in relation to the dollar, to Rmb 8.27, following a Friday report in the China Securities Journal, owned by the state, which said that the time was “ripe” for the renminibi to be revalued.

While most analysts said that the brief change in the renminibi’s value was either a rogue price or a glitch in the system, some speculated that Beijing had allowed the variation in the renminibi’s value on purpose, in order to see what would happen in its trade.

Expert opinion remains divided as to when Beijing will finally act on revaluation. Some say it could come at any time, but others believe that revaluation isn’t likely before May 18, when foreign banks will begin spot trading foreign currencies in China.

Whenever revaluation of the renminibi comes, other Asian currencies are expected to strengthen because those nations would be able to let their currencies appreciate without having to lose their competitiveness against China.