From the Financial Times:
US expects Chinese currency revaluation
The Bush administration has told key senators that it expects China to revalue its currency in August ahead of a planned visit to Washington by President Hu Jintao in September, according to people familiar with the matter.
Senators Charles Schumer and Lindsey Graham, co-sponsors of a bill that would impose a 27.5 per cent tariff on Chinese imports, agreed to delay a vote on their bill after receiving what they regarded as an assurance that China will move on its currency next month.
In a June meeting attended by Alan Greenspan, Federal Reserve chairman, John Snow, Treasury secretary, told the senators that he believed China would allow the value of the renminbi to increase against the dollar in August, the people familiar with the discussion said.
The big unanswered questions are: How large will the revaluation be? By how much will China be able to ease off on its purchases of US securities? What will happen to US interest rates as a result? What will the effect be on US imports from China?
For what it’s worth, here are my guesses: 10%, not much, a very slight rise, and almost none.