South Korea said on Sunday any revaluation of China's yuan will probably boost the country's exports and trade surplus, as increased export competitiveness would offset a potential slowdown in Chinese demand. Policy makers and the central bank have been assessing the impact of a Chinese change on the South Korean won and the economy, Asia's third largest, as speculation grows that Beijing is close to changing its yuan peg. The central bank said in a statement that a yuan revaluation would make the won more competitive and see an additional $2 billion worth of Korean exports in a year after a shift.
The bank's forecast were based on an assumption that the yuan could strengthen up to 10 percent, and the won could appreciate 2 percent against the dollar.
China has pegged the yuan near 8.28 per dollar since the Asian financial crisis, but has faced increasing calls for a revaluation from the United States and other countries who say the currency is undervalued. However, the Bank of Korea said a yuan revaluation would also probably weigh on Chinese economic growth and hurt its domestic demand, causing a fall in demand for South Korean goods, particularly semiconductors, computer parts and steel products.
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