“I maintain the view that it is likely that China refloats the renminbi in April,” before a meeting of U.S. and Chinese officials in Beijing, Jen, a managing director at BlueGold in London, wrote in a report to clients today.
Officials in Beijing have resisted allowing gains in the yuan, having controlled its value since July 2008 after it strengthened 21 percent against the dollar in the previous three years. The status quo has drawn criticism from European and U.S. policy makers, who say keeping the currency undervalued has given China’s exporters an edge and is inflating asset bubbles.
Allowing the yuan to gain “should help diffuse much of the risks associated with trade protectionism and allow China to resume building the institutional framework necessary to conduct monetary policies independent from those of the Fed,” said Jen, a former chief currency strategist at Morgan Stanley.
Chinese and U.S. policy makers including U.S. Treasury Secretary Timothy F. Geithner are scheduled to attend a Beijing summit in May, while Geithner’s department is preparing to release its twice yearly currency-market report next month.
The last time the Chinese government revalued the yuan, or renminbi, was on July 21, 2005, when it dropped its currency peg, letting it appreciate 2.1 percent to 8.11 per dollar.
