Investors should buy yuan-denominated assets or open yuan deposit accounts because the Chinese currency may appreciate by as much as 6% a year, according to Bank of Singapore.

“If anything is close to certain it’s that the renminbi will appreciate,” Head of Product Development Marc van de Walle said at a media briefing in Singapore today, using the yuan’s alternative name. “It’s got the potential to appreciate between 4% and 6% annually, and maybe even a bit faster,” he said, without providing a specific time frame.

 

The yuan should advance about 5% annually to help tame inflation and avoid asset bubbles, Li Daokui, a People’s Bank of China monetary policy committee member, said in an interview at the World Economic Forum in Davos yesterday. The currency reached a 17-year high of 6.5808 on Jan. 24, and the median forecast of analysts surveyed by Bloomberg is for a year- end exchange rate of 6.3 to the dollar.

 

Consumer prices in China rose 4.6% in December from a year earlier, following a 5.1% advance the previous month that was the biggest jump in more than two years. Inflation may peak at 6% this month as snowstorms damage crops and disrupt transport ahead of the Lunar New Year holiday, Daiwa Capital Markets said in a note yesterday.