Washington: The perennial shadow boxing that marks attempts by Governments or international financial institutions to get China to re-value its currency more realistically is set for another round with International Monetary Fund (IMF) managing director, Dominique Strauss-Kahn, issuing a call to the  recalcitrant Asian economic giant to agree to a meeting to resolve the issue.

Strauss-Kahn is coming under increasing pressure from European countries, and the US, to convince the Chinese into making a substantial adjustment in the value of the yuan, which means allowing it to rise at a faster rate. Washington, and European countries, have long argued that an undervalued currency gives Chinese producers an unfair advantage in global markets.

US criticism has been more muted in recent times, as the yuan's rise against the dollar has gathered speed. In all, say analysts, it has risen about 20 per cent overall against the dollar since 2005.

In contrast,  it has actually depreciated 7 per cent overall against the euro in the same period.

Strauss-Kahn set the ball rolling this week in Cancun, Mexico, by calling the Chinese yuan ''substantially undervalued.'' However, observers caution that he may not make much headway on the issue now.

Unlike earlier, when Chinese determination to preserve their cost advantage guided currency policy, economic circumstances may now have changed radically preventing them from reciprocating to demands from other nations to revalue their currency, even if they should wish to do so.

According to senior IMF officials, the Chinese economy may not allow much room for maneuvers now. Inflation rates, they say, are well above the comfort zone. This would call for interest rates to be raised, or exchange rates to appreciate - or both.

The catch-22 for the Chinese is that interest rates cannot be raised as that would attract more capital inflows and put further pressure on the exchange rate.

However, these officials caution that the Chinese will have to start somewhere, as the problem cannot be allowed to fester.  Not allowing the yuan to appreciate would invite higher inflation, they said.