China's currency saw volatile fluctuations against the US dollar between February and April, and observers have been puzzled about the yuan's future trend.

The central parity rate of the yuan was reduced by 32 basis points to 6.1137 against the US dollar on April 30, the strongest level since the beginning of the year, according to the China Foreign Exchange Trading System. The central parity rate is set by China's central bank.

However, the yuan's spot price against the dollar weakened to 6.2028 on April 30.

The central government hopes to maintain currency stability. Previously, Premier Li Keqiang said in an interview with the Financial Times that the Chinese government doesn't want the yuan to depreciate further. Li also said China would not seek to boost exports through yuan depreciation. If China doesn't focus on expanding domestic demand, it would be hard to adjust the country's economic structure, Li noted.

Market players believe the Chinese currency's volatility is the result of normal fluctuations, which have been triggered by recent interest rate cuts in China.

In the long term, there is still room for the yuan to strengthen slightly against the dollar. But overall, the yuan's exchange rate is nearing equilibrium.

The author is Zhang Mo, a media personality.

Economic Information Daily