Beijing may allow the yuan to appreciate in the second half of 2010 in order to keep up with currencies in other markets including South Africa and Indonesia, Bloomberg reported, citing J.P.Morgan’s Chief Asian Strategist Adrian Mowat. In the last six months of next year the base effect on inflation and commodity prices will look a lot less favorable, Mowat said. He believes there might be an incentive for China to allow the currency to appreciate in order to manage inflation without raising domestic interest rates. Mowat earlier cut J.P.Morgan’s rating on China to "underweight" from "neutral," advising emerging-market money managers to focus on South Africa and Thailand as the recovery of their economies will accelerate later this year, extending gains in their respective currencies.
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