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One currency that's dodged the emerging market rout

Teh Eng Koon | AFP | Getty Images

While the violent selloff in emerging market currencies has spared few, there's one currency that has emerged from the storm unscathed: the Chinese yuan.

Over the past month, the yuan has bucked the downdraft, rising 0.3 percent against the dollar - a stark contrast from peers such as the Indian rupee and Indonesia rupiah that have fallen between 7-7.5 percent over the same period amid escalating fears around the Federal Reserve winding down its monetary stimulus.

(Read more: Is this currency about to follow the rupee's crash course?)

The country's trade surplus and improving economic data are luring investors back into the currency, as concerns of a hard landing in the world's second largest economy fade.

"China's in a stronger position than most emerging markets. It's current account (surplus) is a big thing, the economy is still well managed," said Nizam Idris, head strategist of fixed income and currencies at Macquarie, who sees the dollar-yuan pair strengthening to 6.0 as soon as the year-end, from 6.12 currently.

China's current account - a broad measure of the country's trade with the world - maintained a surplus of $48.2 billion in the second quarter, up from $47.6 billion in January-March.

"Even though (emerging markets) growth is slowing, economies that are undergoing reforms, like China, will be awarded a premium," he added, referring to the government's efforts to rebalance from an investment-led to consumption-driven economy and overhaul the country's financial system.

(Read more: Yuan as global currency? Many firms don't see benefits)

Paul Mackel, head of Asian Currency Research at HSBC, said the better-than-expected July industrial production and imports data out of China have assured markets that capital outflows from the country may be slowing.

While foreign exchange purchases declined by 24.5 billion yuan in July after falling 41.2 billion yuan in June - a sign that capital outflows have continued - Nomura says the trend of capital outflows may have reversed to one of moderate inflows in August.

Another supporting factor, is the widening of the interest rate gap between the renminbi and the U.S. dollar as the People's Bank of China maintains a prudent monetary policy, said Mackel.

(Read more: China data blitz points to stabilize economy)

"From here, further renminbi strength cannot be ruled out," he wrote in a recent report.

One risk to this outlook, however, is a stronger-than-expected recovery in the U.S., said Idris, which could increase the U.S. dollar's appeal over the Chinese currency.

—By CNBC's Ansuya Harjani; Follow her on Twitter @Ansuya_H