I tend to agree with Anderson that there will not be a one off revaluation but that the exchange rate will be allowed to slowly drift upwards and not have to be revalued by 15-20% in one go as suggested by Pettis.
Pettis relies on China being "forced" to revalue. I believe China is able to absorb alot more that Pettis predicts before it will be "forced" to do anything even if the pain is significant. Those that feel the pain will not be able to efficiently transmit this pain to those that make the decision.
Should we expect a one-off jump or more gradual appreciation of the renminbi?[China Financial Markets]
In a recent report Jonathan Anderson of UBS explains why he doesn’t think China will adjust the currency via a large one-off revaluation. As regular readers of my blog know, I have been arguing since early 2007 that there is a high probability that the financial authorities will eventually be forced into a one-off (15-20%) revaluation, although I am uncertain about the timing.