Economist: China should give yuan a boost

BEIJING, Nov. 23 (UPI) -- A UBS AG economist based in China said Beijing should allow the yuan to appreciate to stem inflation that could result from an influx of currency speculation.

Economist Wang Tao said, "China's economic fundamentals mean that the yuan should strengthen," China Daily reported Monday.

"The central bank will find it harder to manage liquidity and inflation when a flood of speculative funds returns, betting on the yuan's appreciation," she said.

In effect, as investors anticipate the government allowing the yuan to gain strength, there could be rush of speculative investing before hand, Wang said.

Wang said China should do "the unexpected" to balance the notion that the yuan is a sure bet, the newspaper said.

The chairman of Morgan Stanley Asia recently forecast China will "ultimately" allow the yuan to adjust to other currencies in the open market.

If that occurs, the yuan could find itself in the position as the world's reserve currency by 2019, Russian Finance Minister Alexei Kudrin said.