Possible Reevaluation Of The Yuan?

Kanundrum analysts and top trader Brian Kelly reported Thursday that there is a possibility that there might be a one-off reevaluation of the yuan coming out of China within the next 12 months - as much as 10%, with a +/- 3% reevaluation every year afterward.

Kelly believes that there could be something to the rumor that China may reevaluate its currency due to concerns over rising inflation. Appreciating the yuan would serve to "dampen inflation", according to Kelly, as well as benefit the country politically.

Qu Hongbin, senior economist at HSBC Global Markets, disagrees.

He stated on January 7th that a one-off reevaluation is the minority view among economists in Beijing. He also doesn't believe that China will appreciate its value, since they view that "gradual monetary policy is the safe bet".

An appreciation of China's currency would benefit multinational corporations in the U.S. because it would essentially make domestic U.S. products more affordable for the Chinese to purchase. Kelly believes that such a move would be good for commodities as well as the stock market.

You can check out the full article and video at CNBC.com.