The central parity rate of the Chinese currency renminbi (the yuan) hit a six-month high against the U.S. dollar in January.
The yuan strengthened to 6.7025 against the dollar Thursday, the highest level since last July, before weakening 56 basis points to 6.7081 on Friday, according to the China Foreign Exchange Trade System.
This January saw a 2.4-percent rise of the exchange rate, the strongest month in a year.
Analysts attributed the strengthening yuan mainly to a weaker U.S. dollar in the month and market optimism for improvement in the external environment.
Wang Qing, chief analyst with Golden Credit Rating International, said the exchange rate would maintain overall stability and show two-way fluctuation within a wide range.
The exchange rate will likely fluctuate between 6.5 and 6.9 this year, said Pan Yuzhang, a researcher with Xiangcai Securities.
Market expectations for future growth of China's economy will be supportive in keeping the currency relatively stable, analysts said.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
The central parity rate of the yuan against the dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.