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China Won't Allow Yuan to Appreciate: Roche

The Chinese authorities won't allow the yuan to appreciate over the next year or so, said David Roche, global strategist at Independent Strategy.

"The reason they won't let it appreciate is because despite the good growth figures coming out of China, this is all related to stimulus and the domestic economy," Roche told CNBC.

"The export sector is really a story of swathes of empty factories with no place to export to. So China does not want to lose those factories -- it wants to employ them to boost growth, particularly when the stimulus and credit boom which they have engendered runs out of steam as an economic driver."

In the longer term, Beijing would need to let the yuan appreciate, but it is not a short-term story, he added.

"I think if you go down the road, the likelihood is that the renminbi will be a major reserve currency because the world is looking for one to replace the dollar," Roche said.

The currency is unlikely to replace the dollar, believed Roche, but more a basket of different currencies, including gold.

"(This will) help China because if it does its international trade in renminbi, it can then store its reserve currency and renminbi and not have to take a risk on its investments in a declining U.S. dollar and U.S. assets."

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