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.
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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.
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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.
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"It is evidence that the incoming funds are short-term speculative money following political factors," Lu said.
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In the spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day.Â
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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.
