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English>>China Business

Yuan price to fluctuate amid hot money influx

(Xinhua)

09:59, November 08, 2012

The yuan may appreciate against the U.S. dollar in the short-term due to speculative money, but will depreciate in the long run and achieve equilibrium, some experts said.

The yuan's central parity rate against the U.S. dollar strengthened for a second consecutive trading day this week to 6.3067 on Wednesday.

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, said Lu Zhengwei, chief economist with the Industrial Bank.

"It is evidence that the incoming funds are short-term speculative money following political factors," Lu said.

In the spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day.

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