By Peter Garnham in London and Robert Cookson in Hong Kong
Published: January 19 2010 18:31 | Last updated: January 19 2010 18:31
Few questions loom larger with currency strategists this year than whether, and to what extent, China will allow its currency to appreciate.
The country is under growing pressure from its international trading partners, led by the US, Europe and Japan, to let the renminbi rise. But so far it has shown little willingness to heed such calls.
On the contrary: last month, Wen Jiabao, China’s premier, said he would “absolutely not yield” to pressure for a stronger renminbi.
But the overwhelming consensus among analysts is that China is likely to abandon the renminbi’s de facto peg to the dollar as the world emerges from the financial crisis.
Indeed, over the last month, the futures market has moved from expecting a 1.7 per cent appreciation in the renminbi against the dollar over the next year to forecasting a rise of more than 3 per cent.
Adrian Foster at Rabobank says: “The combination of rising foreign exchange reserves and renewed growth in exports is likely to result in growing calls for China to revalue the renminbi.
“We expect the authorities to restart currency reform this year.”
financialtimes