• A more robust yuan means Beijing can afford to import more goods
As China prepares to revalue the yuan, other Asian currencies are strengthening in anticipation. When Beijing makes its move, they'll probably rise even more. "A Chinese appreciation will kick off tightening in the whole Asian complex of currencies," says Richard Benson, who oversees $14 billion in currency funds at Millennium Asset Management in London.
Markets have seen this before. In 2005, the last time Beijing relaxed its foreign currency regime, the Singapore dollar, Indonesian rupiah, and Malaysian ringgit all climbed faster than the yuan. A sign of things to come: On Apr. 14 the Singapore Monetary Authority boosted the value of its dollar by 1.1% to cool the economy. First-quarter gross domestic product grew at an annualized rate of 13%.
The bottom line: The Asian reaction to a likely yuan revaluation signals China's growing strength—and the waning power of the dollar.