Pressure on the People’s Republic of China to let the yuan rise is coming from all directions, says StanChart, though “poor export numbers, sluggish private investment growth, and low inflation provide little incentive for China to do anything at this point.

This is based on a Dow Jones “flash” on the StanChart view.

However, StanChart expects these numbers to pick up in 2010, and “we could see a move in the yuan by the second half of 2010.”

“House call” is officials will de-peg the yuan in 2Q or 3Q10, then return to gradual upward path followed from 2006 until 1H08; looks for 2% rise in the yuan by year-end (with USD/yuan at 6.70).

“It is important to note the decision to move away from the peg is essentially a political” one; with G20 meeting in April, at which exit strategies and global imbalances will be discussed, FX “will inevitably become an even hotter topic in 2010.”

If China were to move away from the yuan peg, what would this mean for Asia ex-Japan?

When China revalued in July 2005, the biggest reactions from the Korean won and the Singapore dollar.

While correlation between the yuan 12-month non-deliverable forwards and the won is not very strong, it is positive; correlations between the yuan NDF and the Sing$ and the Malaysian ringgit is relatively strong, “indicating both may be good proxies for the yuan, especially as we look for appreciation in the coming year.”