GOLDMAN Sachs Group Inc said the yuan will gain about 10 percent in a year, retaining its forecast, saying China will stem inflation and "buck the trend" in the region's fight against rising prices.

The yuan was the best performer in the past three months among the 10 most-active currencies in Asia outside Japan, while seven have slumped against the dollar as food and oil costs surged, fueling inflation in the region, Bloomberg News reported.

China is different because its central bank has tightened monetary policy earlier and more "aggressively," according to Goldman.

China's inflation may slow "toward 5 percent to 6 percent" later this year, Goldman's Hong Kong-based analysts Song Yu and Hong Liang wrote in a report published yesterday.

The central bank has ordered banks to set aside more of their deposits as reserves five times this year, following 10 such moves last year. It also raised the benchmark interest rate six times in 2007.

China, which hosts the Olympics in August, will sustain 9 to 10 percent real growth in the coming years, provided it manages to contain inflation without "overly restraining its domestic demand," Goldman's analysts said. The economy won't see a games-related boom and bust cycle, Yu and Liang said.

The yuan will strengthen to 6.3 against the dollar in 12 months, they said, from 6.9027 as of 1:52pm in Shanghai.

A slower pace of gains this quarter, 1.6 percent compared with 4.2 percent in the previous three months, is a "normal China-style stop before the go" approach, Liang said.

South Korea's won is the worst performer in the region this year, with a 10.6-percent decline, as the Bank of Korea kept interest rates unchanged last week.

Policy makers last adjusted borrowing costs in August with a quarter-percentage point increase.

The Indian rupee and the Philippine peso have slumped 8 percent and 7 percent respectively. Bangko Sentral ng Pilipinas raised its interest rate on June 5 for the first time in more than two years.