Banks review yuan reval forecasts

Bank of America (BoA) now believes there will be a first step to widen the yuan trading band from 0.3% around the 8.28 peg to the dollar to about 3% in the first quarter of 2005. Previously, the bank was forecasting change in the second half of next year.

Uwe Parpart, FX strategist at BoA in Hong Kong, said that since the increase in benchmark interest rates on October 28, discounts on dollar/yuan non-deliverable forwards have moved markedly to price-in yuan revaluation in the month ahead. "