The spot exchange rate of the yuan has recently climbed to several record highs against the US dollar, and if the Chinese currency continues to keep its appreciation pace, market players need to be aware of the possibility of a sudden turnaround in the exchange rate.

With no big changes seen lately in China's economic fundamentals, the yuan's rise is mostly a result of easing liquidity pressures elsewhere in the world market. Since the beginning of the third quarter, many countries - including the US and several EU nations - have rolled out stimulus policies and easing measures to sustain economic growth at home as they grapple with stalling economies and relentless debt problems.

Yet, it should also be pointed out that the yuan's exchange rate and China's international trade balance are already near equilibrium levels. Therefore, the continued appreciation of the yuan is not in the interest of the domestic economy. And considering the uncertainties still swirling in the global economy, a reversal could come at any time.

The author is Zhang Monan, an economics researcher from China's State Information Center.