Money

Chinese economist sees 5-6% yuan rise in 2011

(Agencies)
Updated: 2011-01-07 15:09

BEIJING - The yuan is expected to rise between 5 and 6 percent this year against the US dollar, Li Daokui, an adviser to China's central bank, was quoted as saying in a local newspaper.

"My personal view is that the yuan will rise by 5 to 6 percent this year in a controlled and gradual manner," said Li, one of three academics on the central bank's monetary policy advisory committee.

Li's comments were reported by the Xiaoxiang Morning News on Thursday. He had made the remarks in a speech on Wednesday at an event sponsored by the newspaper in Changsha, the capital city of China's central Hunan province.

Li said China will steer its monetary policy in a modest and gradual way, and that investors should not rule out the chance of more interest rate rises in 2011.

He added that China's economy will grow at least 9.5 percent this year, and that inflation will hit 4 percent. This means economic growth will largely be on par with last year's pace, while inflation picks up from 2010's 3.3 percent.

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If the yuan indeed climbs 5 percent this year, it will far outstrip market expectations. The latest pricing in offshore forwards market showed investors only see the currency gaining 2.7 percent for all of 2011.

China's central bank reiterated on Thursday that it would keep the yuan exchange rate "stable." But with China's inflation hitting a 28-month of 5.1 percent in November, some analysts believe the country will be compelled to let the yuan rise faster to rein in inflation.