Yuan price hits six-month high (2)

Trade figures have always been key in observing the changes in exchange rates, said Zhao Qingming, an economist at Beijing-based University of International Business and Economics.

The trade surplus is expected to expand to about 200 billion U.S. dollars this year, thus pushing up the yuan price, Zhao said.

International capital flows into Hong Kong have strengthened anticipations for the yuan's appreciation, but unlike Hong Kong's highly open market, the mainland has limits on incoming capital and, therefore, little hot money has been spotted on the mainland, Zhao said.

The spot prices of the yuan have experienced ups and downs in the past days to the daily limit, showing that the central bank is letting the market go and the market is not fully mature yet, said Ding Zhijie, an economics professor at the University of International Business and Economics.

The spot price of the yuan has been stronger than the central parity price since September, indicating robust incoming investment. However, the non-deliverable forwards (NDF) of the yuan, a key indicator of the overseas market's expectations for the currency, show expectations of depreciation in the long term.

The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices before the opening of the market each business day.

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