BEIJING - China will probably revalue its currency, the yuan, within three months by widening its trading band by three percent on either side of its current peg rate, an influential investment bank said Monday.
Investment bank Citigroup said it was 40 percent probable that the "mild" revaluation would occur within three months, slightly more likely than the "three month to one year" scenario which it gave a 30 percent chance.
Citigroup said there was a 10 percent chance a revaluation would come in one to three years' time and a 20 percent chance it would take more than three years to revalue.
The US-based financial services group said it was 50 percent likely the yuan would be revalued by widening its trading band, compared with a 40 percent probability that it would be tied to a basket of currencies instead of the US dollar alone.
Its report gave the "revalue and peg" option a 10 percent chance of adoption by Chinese authorities and ruled out the possibility of a free float.
The group predicted China would introduce the change unannounced and label it a more flexible version of the current "managed float" regime.
The yuan has been fixed in an extremely narrow trading band around 8.28 to the dollar for over a decade, but China is under increasing pressure from its trading partners and its own ballooning foreign currency reserves to allow the yuan to appreciate.
04/04/2005 09:36 GMT