US Congress is trying to take legislative action to force China to finally revalue its currency, a move that was resisted by th Chinese authorities for a long time. The bill introduced by Rep. Tim Ryan (D., Ohio) yesterday claims that exchange-rate manipulation is a prohibited export subsidy and calls for sanctions on Chinese exports. The day before, the Senate supported the plan to impose a 27.5% tariff on all Chinese products if the nation continues to oppose revaluation. The presidential administration has so far favored negotiating technique to press Chine to revalue yuan.

The outlook for the dollar remains negative, given the forecasts of a number of the world’s top financial institutions, such as UBS AG, Deutsche Bank AG and Merrill Lynch & Co. Deutsche Bank is the world’s second-largest currency trader,and Merrill Lynch came in second among the most accurate overall forecaster of exchange rates in the fourth quarter, according to Bloomberg. The dollar bears are citing US huge budget deficits and the current account gap that hit 5.7 percent of gross domestic product in the fourth quarter of last year, according to the Commerce Department. Analysts believe that these facts will rivet the market’s attention after the impact of short-term factors such as interest rate hike wanes.

``We’ve been dollar bears for the last three years and we’re holding that view,’’ Trevor Dinmore, vice president of foreign-exchange strategy at Deutsche Bank in London said. ``On the trade side, we’re likely to see a larger deficit over the coming months.’’

The dollar bulls, on the contrary, point to the 3.8% annualized growth of the US economy in 2004, as opposed to a meagre 0.2% eked out by the eurozone.

``Traders are taking the softness of the European economy more and more seriously,’’ said Stephen Jen, head of global currency research in London at Morgan Stanley. ``The U.S. data is still positive and the U.S has a lot of momentum behind it.’’