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The yuan is expected to rebound once the United States dollar starts to weaken again, analysts said, adding that the Chinese currency's drop last week was not so much a depreciation in its value but rather because of the greenback's strong rise.
The yuan ended at 6.8700 against the US dollar last Friday at the China Foreign Exchange Trade System, down from 6.8588 a week ago. The yuan has been falling weekly for a month while the US dollar has performed strongly recently.
''It's not that the yuan depreciated but that the US dollar rose too strongly,'' said Lu Zhengwei, an Industrial Bank chief economist. He pointed out the yuan still appreciated against other major currencies although it fell against the greenback. The yuan is likely to rebound once the greenback heads southward, he said.
There has been talk China is slowing the pace of gains in the yuan to halt an inflow of hot money and to back sustained rise in the economy.
''The recent tumble of the yuan showed the currency is moving toward a two-way fluctuation rather than a continuous appreciation,'' the economist pointed out.
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