Wire: BLOOMBERG News (BN) Date: 2008-03-24 07:46:58
China Merchants Bank's Liu Doubts China Will Revalue Yuan

By Judy Chen
     March 24 (Bloomberg) -- Liu Dongliang, a foreign-exchange
analyst at China Merchants Bank Co. Ltd. in Shenzhen, said a one-
off revaluation in the yuan is unnecessary.

On a revaluation:
     ``Most local exporters I talked to said they are now
shouldering great pressure in the face of decreasing orders from
the U.S. and rising costs on yuan appreciation. The trade surplus
dropped substantially in February. If there is a one-off
revaluation, small or medium-sized exporters probably won't
survive. That will hurt China's economy.
     ``One-off revaluation won't deter inflows of speculative
money. Investors will bet on another one-time revaluation if the
government will allow one.''

On whether yuan appreciation will help curb inflation:
     ``Yuan appreciation alone won't curb inflation as China's
inflation is mainly driven by price increases in production
elements, such as land and labor, not by price increases in
imported commodities.
     ``The yuan may break 7 this month, and gains will accelerate
till the end of the second quarter. There is much uncertainty
about what will happen after that. As the dollar may rebound in
overseas markets in the second half of this year, yuan
appreciation will probably slow down.''

--Editor: Simon Harvey, Sam Nagarajan

To contact the reporter on this story:
Judy Chen in Shanghai at +86-21-6104-7047 or
xchen45@bloomberg.net

To contact the editor responsible for this story:
Nicholas Reynolds at +81-3-3201-8676 or
nreynold2@bloomberg.net.

 
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