MOSCOW — The weakening of the U.S. dollar due to the revaluation of China’s yuan, ending its peg to the dollar, could strengthen the ruble, Igor Lavushchenko, an analyst at Prospekt investment consultants, told RBC. If the dollar dropped vs. the euro, the ruble would firm, he said.

“Though the yuan is not traded on world markets, speculators buy it eagerly,” Lavushchenko noted. “In June 2005, the yuan/dollar exchange rate rose 52 percent compared with 12 months before. Now, after China’s currency reform, traders will restructure their portfolios to cut the share of dollar-denominated instruments and increase that of yuan instruments,” he forecast, adding that the dollar’s sharp decline – by 2 percent – on forex markets would be corrected.

For his part, Mikhail Zak, at Veles Capital investment specialists, said China’s reform took traders by surprise, though it was not unpredictable. The analyst doesn’t think the reform would have a direct impact on the ruble. “The ruble will be affected, but in an indirect way,” Zak believes. If the ruble did strengthen, this could boost interest in Russian stock, both government and corporate, he added.

The People's Bank of China announced on Thursday a 2.1 percent revaluation of the national currency and a system setting the yuan’s value with reference to a basket of unspecified currencies. Since 2000, the yuan had been trading against the dollar within the range of 8.276 to 8.28. Starting July 22, it can fluctuate by 0.3 percent against the U.S. currency.

China’s decision is a victory for the U.S. administration, which had long urged Beijing to revalue the national currency. Analysts say the new exchange rate regime is unfair as it puts the Chinese currency in a more favorable position, allowing the country’s manufacturers to keep prices low on export markets.