STANDARD Chartered Plc said yesterday that its transaction banking business surged 80 percent in China last year and it expects to maintain strong and stable growth in the future.

The expansion is about five times the average market growth. China is the fastest growing market for the UK-based bank in this area of business.

Its growth in China is expected to continue in the future, which will make it one of the lender's five biggest markets in five years, said Tan Kah Chye, managing director of the bank's transaction banking unit, yesterday.

Transaction banking, including trade finance and cash management, accounted for more than half of the bank's corporate banking business. China and India are the two fast-growing markets for the bank in the sector.

With the yuan appreciating against the US dollar, the bank said it has already found some of its trading clients shifting to a variety of currencies and moving to export markets like India and Africa rather than solely focussing on the US market.

The bank said in a foreign exchange report that it adjusted the yuan forecasts, expecting a slower appreciation by the end of the year.

The bank is projecting the yuan to move to 6.55 per US dollar by the end of this year, from the previous 6.35 forecast.

The bank expects the yuan to reach 6.35 at the end of June 2009. This implies a nominal effective appreciation of some 4 percent over the year, a similar pace to 2007.

"It seems clear to us that while China would benefit from a faster appreciation, the consensus in Beijing has moved against continuing the pace set in Q1," the bank said in the report.

Worries about exports are fueling opposition to further yuan appreciation, it said.