By 2015 the Chinese yuan will be the number three currency in the world after the US dollar and the Euro

There are several recent forecast / predictions for the Chinese yuan by noted economists.

* By 2015, a third of China’s cross-border trade will be settled in yuan, making the yuan one of the three most-used in global trade along with the dollar and euro, HSBC forecast in a report this month

* The Chinese yuan will appreciate 2.1 percent to 6.1 per dollar this year

* “I would expect China to increasingly move towards a managed float with more flexibility,” Irene Cheung, a foreign- exchange strategist at Australia & New Zealand Banking Group in Singapore, said by telephone today. “Basically convertible is possible in five years, but it might not be 100 percent convertible.”

London is racing against Paris and Zurich to become the center for yuan trading in Europe as China seeks to take its currency global.

Empirical research has suggested that each 1 percentage point increase of GDP as a share of the world total (measured at actual exchange rate) leads to a 0.55 percentage point rise in central bank reserve holdings in the corresponding currency. Assuming the share of Chinese GDP to world GDP (at current prices and actual exchange rates) rises by 10 percent (taking into account the likely appreciation of the yuan) over the next 10 years, this would suggest at least a 5.5 percentage point increase in central banks’ yuan holdings.

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