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Funds seeking to benefit from China’s revaluation

China has bowed to US pressure and revalued its currency, with fund managers expecting their funds to benefit.

The renminbi, which is colloquially known as the yuan, will be measured against a basket of currencies rather than pegged against the dollar.

The move is expected to make Chinese exports marginally more expensive while helping exporters to China.

The yuan is now 2.1 per cent more valuable, up to 8.11 from 8.28 to the dollar. It is free to move against the dollar by up to 0.3 per cent a day, meaning that it could rise by 6 per cent a month.

While such a big rise in the value of the yuan is not widely predicted, Schroders chief economist Richard Batley expects an incremental increase to moderately raise inflationary pressures in the US.

Scottish Widows Investment Partnership global strategist Roddy Macpherson says the move is probably the Chinese response to proposals by US senator Charles Schumer to impose trade tariffs on Chin- ese imports. He says the delay to Schumer’s proposals earlier this year was most likely the result of an understanding being reached between the Chinese and Americans over a revaluation.

Newton Oriental fund manager Jason Pidcock says his funds are well placed to benefit directly from the currency translation and also from an expected longer-term positive effect on equities in the region.

Bestinvest business development manager Justin Modray says: “In the short term, this makes life a bit more difficult for the Chinese as it dampens the competitiveness of their exports. For a UK investor in funds linked to the region, there is a margin for concern in the short term but we still think the Chinese story is very strong long term, with this kind of volatility to be expected.”


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