US investment bank Merrill Lynch said that China will revalue the renminbi by 10% against the US dollar near the end of 2004 and shift to a peg against a basket of three currencies. Merrill Lynch said that the revaluation would not be a result of US political pressure, but rather from China seeking to address internal imbalances including high credit growth, a large current account surplus and the accumulation of foreign exchange reserves. The bank said that a general adjustment of the exchange rate would lead to more speculative capital inflows � hence the need for a revaluation and a peg against the dollar, euro and yen.