The Renminbi Is Expected To Appreciate Rapidly To The Highest Level In 17 Years.

In view of China's central bank's third increase in four months

In Shanghai, at 9:43 a.m. on February 8th, the yuan was against the US dollar.

Today, emerging economies are facing two major challenges, one is to curb domestic inflation, while the other is to maintain a near zero interest rate in the US and Europe, and to prevent speculative influx.

At present, China's interest rate is still lower than the inflation rate, which makes the domestic people prefer to spend money rather than exist in the bank.

"They are worried about the risk of overheating," said Thomas Lutz, head of emerging markets and foreign exchange division at Rui long bank, Zurich.

Monetary tightening should be consistent with the tightening of policy interest rates.

I still think RMB will rise to $1 this year to 6 yuan. "

On Tuesday, the central bank announced a 0.25 percentage point increase in the benchmark one-year lending and lending rate for financial institutions. The adjusted one-year deposit rate rose to 3%.

Nevertheless, China's benchmark interest rate is still far below Brazil's 11.25%, India's 6.5% and Russia's 7.75%.

According to the DA and capital market estimates, China's inflation rate is likely to climb to 6% in January because of pre holiday demand growth and crop damage by snowstorms.

The yuan has appreciated by 3.7% since the Chinese government loosened its peg to us dollar policy in June last year.

In the week after the first two increases (last October 19th and December 25th), the yuan appreciated by 0.3% and 0.6% against the US dollar respectively.

"The renminbi will be stronger than the market expected," fan Nan, global investment director of Baosheng bank in Singapore, said.

It is estimated that RMB will rise to about 6.2 to 6.4 yuan in 1 yuan in one year.

From the Bloomberg News Agency's interview with 25 analysts, their median forecast will be 4.5% appreciation in the year.

The independent survey shows that the India rupee will rise by 3.3% in the year and 1.8% in Brazil and 3.8% in Russia.