Factbox: Forecasts for yuan after China drops dollar peg

"While the central bank stated it will reintroduce the emphasis of "reflecting market supply and demand with reference to a basket of currencies" in the CNY exchange rate, we believe the most likely scenario is for the CNY to return to a crawling peg against the USD, resembling the exchange rate regime during 2005-2008, at least initially ... While we adjusted our exchange rate forecasts of the AEJ currencies on June 10 to incorporate our new EUR/USD forecasts, we have kept our 3, 6, and 12-month USD/CNY exchange rate forecasts unchanged at 6.74, 6.66, 6.49."

ANDY ROTHMAN, MACRO STRATEGIST AT CLSA IN SHANGHAI (JUNE 19): "The PBOC statement makes clear that the currency will move only very gradually. I expect only about 0.2 percent a month until the situation in Europe stabilizes. Then look for the appreciation to return to the 5-7 percent pace of the 2005-2007 period."

BRIAN JACKSON, STRATEGIST AT ROYAL BANK OF CANADA IN HONG KONG (JUNE 19):

"We have for several months been forecasting a shift in China's exchange rate policy and for USD/CNY to start falling by the middle of this year -- our long-standing forecast has been for USD/CNY to fall to 6.70 by end-Q2 (a move of 1.9 percent from current levels) and to 6.50 by end-2010 (a move of 5.0 percent). Concerns about the weak EUR and euro area have clearly played a major role in delaying a move lower in USD/CNY, but we have remained confident that such a move would occur based on our view that it would be in China's own best interests -- a stronger CNY would not only help prevent trade tensions from developing later this year but, more importantly, would help to keep China's recovery on a sustainable path and to rebalance its economy. The PBOC's announcement strongly suggests to us that Beijing is ready to move in this direction."

C.FRED BERGSTEN, PRESIDENT OF THE PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS IN WASHINGTON (JUNE 19):

"If the Chinese are smart, they'll let the rate jump up the first few days of next week -- 5, 6, 8 percent -- so as to blunt any ongoing inflow of capital and try to limit the one-way-bet idea and the speculative inflow."

BEN SIMPFENDORFER, ECONOMIST AT ROYAL BANK OF SCOTLAND IN HONG KONG (JUNE 19):

"A more flexible CNY will be welcomed by some of China's critics. But it is clearly unlikely to appease those calling for a large revaluation. Tensions will accordingly persist, especially heading into the U.S. November elections, and should Europe's economic woes worsen. There is accordingly no change to my call for around 3 percent annualized appreciation against the USD over the next year. The call assumes a steady pace of appreciation and targets 6.750 by end-10. The chances of a one-off revaluation remain small in spite of today's move."

GLENN MAGUIRE, NON-JAPAN ASIA ECONOMIST AT SOCIETE GENERALE IN HONG KONG (JUNE 19):