Let's take a look at forecasts by bankers and strategists on the level of expected yuan appreciation after China ditched its peg to the US dollar.
We maintain our forecast for the USD/CNY spot rate to reach 6.60 by end 2010 and 6.20 by the end of 2011.
We believe the most likely scenario is for the CNY to return to a crawling peg against the US$, resembling the exchange rate regime during 2005-2008, at least initially.
CLSA in Shanghai:
The currency will move only very gradually. Only about 0.2% a month until the situation in Europe stabilized. Then look for the appreciation to return to the 5-7 percent pace of the 2005-2007 period.
Peterson Institute for Int'l Economics in Washington:
If the Chinese are smart, they'll let the rate jump up the first few days of next week, so as to blunt any ongoing inflow of capital and try to limit the speculative inflow.
The likely reality is that the yuan will appreciate by more than the statement implies over the remainder of this year and into 2011.