China Is On The Brink Of A Huge Yuan Revaluation

``We believe that reform will centre on a new exchange rate mechanism that aims to allow currency appreciation whilst deterring damaging and, now, unmanageable speculative inflows. We believe in the first instance this will take the form of a further one-off revaluation of the currency, immediately followed by a period of depreciation (similar to the famous BoJ bear traps). A widening of the fluctuation band will then allow the RMB to move more significantly on an intra-day and intra-week basis to introduce more volatility. ''