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The government has in the past consistently ruled out a one-time revaluation, saying there were no grounds for any major shift in exchange rate policy.
Recent indicators, which reflect some cooling in China's economy and a surge in currency speculation, make it even less likely China will opt for an early shift in exchange rate policy, Mr. Chen said.
But four years of recession and an abrupt shift in exchange rate policy this month, which allowed the peso to devalue at least 40percentt in trading on Friday, have put considerable strain on the foreign telephone companies and their Argentine subsidiaries.
The exchange rate is predictable when the shift in exchange rate tends not to switch sign across the different sample periods and unpredictable when the shift bends sign across the different sample periods.
The government has in the past consistently ruled out a one-off revaluation, saying there were no grounds for any major shift in exchange rate policy.
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Indeed, some people in the business have benefited handsomely from the shift in exchange rates.
Taking on debt just before a shift in exchange rates can be painful.
Trade volumes and prices may not adjust much in periods up to a year, but a sustained shift in exchange rates will almost certainly affect long-run production and investment decisions.That, of course, makes timing an issue.
Even in light of good cost control and the benefits of structural changes, "there's no way you can easily digest such a massive shift in exchange rates," Mr. Walter said, adding that in the last seven years, the euro has nearly doubled against the dollar.
In the currency markets, this would mean a steady series of profits from the interest-rate premium that are all wiped out by a large, sudden shift in exchange rates: think of the pound's exit from the European exchange-rate mechanism in 1992.
Jonathan Anderson, chief economist at UBS in Hong Kong, reckons that the yuan is now only 10-15% below its fair-market value.Even over the long run, adjustment towards PPP need not come from a shift in exchange rates; relative prices can change instead.
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Justyna Jupowicz-Kozak
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