(Yicai Global) Dec. 1 -- The Chinese yuan has appreciated against the US dollar for three consecutive months. Analysts believe it will remain resilient versus the greenback, fluctuating within a reasonable range, according to a report by The Paper.

The yuan closed at 6.3701 against the dollar at 4.30 p.m. yesterday, up 120 basis points from the previous trading day. It rose 0.48 percent, or 308 basis points, in November to strengthen below the 6.37 threshold, the third straight month of appreciation. The yuan has gained 2.6 percent against the dollar so far this year.

The yuan-dollar central parity rate strengthened a total of 113 bips to 6.3794 yesterday from 6.3907 on Oct. 29. In the first 11 months of this year, the yuan’s median value against the dollar has risen 2.23 percent.

The yuan exchange rate deviated from the dollar anchor in the direction of appreciation after the decoupling of the dollar-yuan exchange rate and the US Dollar Index, CIB Research noted. The high off-shore yuan interest rate and the rise in short-selling costs are also important reasons in addition to the excessive easing of the US dollar in the domestic market, it said.

Looking forward, CIB Research said the current yuan exchange rate represents a buying-dominated market and short-term strong fluctuations or breaking through the previous peak is not impossible. But with the withdrawal of the exchange settlements after the next Spring Festival, the yuan will hopefully repair the overvaluation of relative fundamentals.

Citic Securities believes that the greater willingness to settle foreign exchange results from strong exports, the easing of China-US relations and the rise of market risk appetite have been factors supporting the yuan recently.

In particular, the easing of China-US relations in the areas of environmental protection and foreign trade has boosted market sentiment. As such the yuan is expected to maintain strength this year, Citic Securities said.

The yuan may face some depreciation pressure amid the impact of greater downward pressure on China’s economy as well as the probability of slowing external demand growth and the normalization of the US Federal Reserve’s monetary policy, the research institute of Bank of China said.

But China’s economy is still resilient and the government has sufficient policy tools for regulation, so the yuan will very likely fluctuate within a reasonable range, the institute said.

Editor: Peter Thomas