China may revalue the yuan by 10 percent to 15 percent in the coming months to reduce the cost of imports in the world's fastest growing major economy, according to Frank Gong, head of China research at JPMorgan Chase & Co.
The yuan advanced 0.23 percent to 6.9850 versus the dollar as of the 5:30 p.m. close in Shanghai compared with 7.0014 yesterday, according to the China Foreign Exchange Trade System. The currency climbed 4.6 percent this year, after a 7 percent gain in 2007.
The yuan dropped last week by the most in eight months, signaling the nation may be seeking to limit the impact of strength in the currency on exporters. Market News International reported yesterday, citing unidentified government officials and economists, that China is reconsidering its policy of quickening yuan gains as it hurts exports and fuels hot money inflows.
The currency's 16 percent gain since the last revaluation in July 2005 has failed to stop import prices from rising, and has attracted funds seeking to take advantage of yuan appreciation, flooding the economy with cash.