A revaluation of yuan would be unlikely to have a significant impact on Chinese exports and would do little to ameliorate the trade deficit in the United States, according to Baring Asset Management. Marino Valensise, head of fixed income and currency, said China probably would allow the yuan to appreciate by a modest 3 to 5 per cent, instead of the 10 per cent demanded by US legislators, who claim the current yuan exchange rate is unfairly undermining US industrial competitiveness. 'The outcome will not be what the US politicians want to see,' said Mr Valensise. 'Even after the currency appreciates, Chinese exporters may well decide to keep dollar prices unchanged and absorb the valuation differences themselves without passing the cost on to their clients.' He said the US trade deficit with China would persist, as the US was no longer a low-cost production centre, while China would remain one of the cheapest global manufacturing centres even after a slight change in the valuation of yuan. Mr Valensise believes a yuan revaluation, combined with strong economic growth in China and other Asian countries, will benefit Asian currencies. 'Economies in emerging markets are improving significantly. A theme we are focused on is Asian currencies and bonds, as well as non-core currencies where we see value,' he said. He advised investors to seek short positions on Japanese government bonds, and long positions on government bonds of Singapore and Mexico. For currencies, he believes investors should consider shorting the euro and the British pound, but going long on the yen, the Swedish krona and Polish zloty. 'In general, all major currencies except the yen do not offer much upside opportunities,' Mr Valensise said.