April 29 (Bloomberg) -- China may revalue the yuan by 10 to 15 percent in the coming months as policy makers seek to temper inflation close to an 11-year high, according to Frank Gong, head of China research at JPMorgan Chase & Co.

The currency's 16 percent gain since the last revaluation of 2.1 percent on July 21, 2005 has failed to curb import prices, and attracted funds seeking to take advantage of continued yuan gains which have flooded the economy with excess cash.

``Given global crude oil prices where they are now and continued rising global resource and commodity prices, the government is weighing the pros and cons of a one-step, large revaluation of renminbi,'' wrote Hong Kong-based Gong in a research report. ``They can continue on the path of accelerated appreciation seen in the first quarter but the negative aspect of it is the hot money inflows.''

Policy makers have pledged to allow further flexibility in the yuan as it rose at the fastest pace last quarter since the decade-long link to the dollar was abandoned. The advance has paused this month because China is reconsidering its policy of quickening gains because it hurts exports and fuels hot money inflows, Market News International said yesterday, citing unidentified government officials and economists.

``It is very surprising that policy makers and think- tankers in Beijing are seriously debating the issue,'' wrote Gong. ``At the very least, we expect the renminbi to continue its accelerated pace of appreciation to reach 6.3 against the dollar by the end of this year.''

The chances of a one-off adjustment are higher than the 10 to 20 percent odds previously forecast, wrote Gong in the note published yesterday. He was unavailable for comment today.

Inflation, Growth

The yuan traded at 6.9960 as of 9:47 a.m. in Shanghai, compared with 7.0014 yesterday, according to the China Foreign Exchange Trade System.

China's economy grew more than 10 percent in the first three months of the year for the ninth straight quarter and consumer prices rose 8.3 percent in March, near the highest in 11 years, according to government data.

So far this year, China has allowed a 4.3 percent gain as it battles to slow inflation whilst oil surges. China is the world's biggest energy consumer after the U.S. and will import 55 to 60 percent of its oil needs by 2020 compared with about 50 percent previously, according to a research unit of the National Development and Reform Commission.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net;

Last Updated: April 28, 2008 21:54 EDT