PBOC governor Zhou Xiaochuan

economy - Minor revalution Renminbi expected

Traders expect a revaluation of the Renminbi of at least three percent in the coming twelve months, the unlinkable Wall Street Journal writes. They deduct this from a deal between the PBOC, China's central bank, on the foreign-exchange market with other domestic banks.

The People's Bank of China's "swap" with state banks allows it to buy $6 billion in 12 months at an exchange rate of 7.85 yuan. To make the deal attractive for the central bank, the yuan would need to rise at least 2.9% from current levels, not including interest. Traders said the central bank could therefore be trying to telegraph its expectations that the yuan will edge higher over the coming year.

The Renminbi will be fully convertible by 2010, PBOC governor Zhou Xiaochuan has said in the past.