December 23, 2005: Yuan is likely to see further upward pressure following China's large trade surplus, though the extent of it is largely a subject of speculation. China's trade surplus is expected to be about US$ 100 bln this year.
After marginal revaluation by about 2.1 pct, against the dollar in July, the currency now trades in a narrow range around 8.1 to the US unit. This revaluation followed the massive protests by manufacturers in Europe and its major trading partners to let the currency rise further.
They are demanding China to make its exchange rate regime more flexible, a move that would likely allow the currency to appreciate, however, China has not given any timetable for its plans.
Considering the price gap between prevailing prices of Chinese products and the rates of local manufacture, however, it is unlikely, that any marginal increase would have any impact of major trade items as Garments, furniture, toys or consumer electronics.