The tightly managed Chinese yuan, which recorded its biggest weekly jump in 2½ years last week, is set to continue on its appreciation path for the remainder of the year as the economy begins to stabilize, say strategists.
"The PBoC (People's Bank of China) has sent a strong message - through much stronger midpoint fixings over the course of last week – that it doesn't want further depreciation of the currency. It would like a period of stability going forward," Khoon Goh, senior foreign exchange strategist at ANZ told CNBC on Monday.
"This is a reflection that authorities are more comfortable with how the economy is faring," he said.
A slew of data from China last week provided fresh signs that the world's second-largest economy is stabilizing, aided by targeted stimulus measures from Beijing.
May retail sales, for example, rose 12.5 percent on year, above analyst expectations for a 12.1 percent increase. Fixed asset investment rose 17.2 percent on year for the January-to-May period, just above expectations for a 17.1 percent rise.
Goh forecasts the currency will see a period of stability followed by modest appreciation in the second-half. He expects it will strengthen to 6.15 by year-end – an almost 1 percent rise from current levels.