Chinese exporters should brace themselves for a steady rise in the value of the yuan while the steep hiking of asset prices looks set to continue, say analysts studying the movements of "hot money."
Although the value of the yuan, China's currency, has hovered at around 6.83 to the U.S. dollar for the past several months, analysts say the rush of international short-term speculative funds has already begun with China's economy showing signs of improvement.
The country saw a massive exodus of hot money because of the global financial crisis in the fourth quarter of last year and the first quarter of this year, said Zhang Ming, an economist with the Institute of World Economics and Politics under the Chinese Academy of Social Sciences.
From the second quarter, the situation reversed with an influx of hot money, he said.
No official figures concerning hot money have been released, but analysts have compiled a scratchy picture from the unusual coincidence of China's increasing foreign exchange reserves and declining trade surplus and reduced expenditure of foreign investment in China.
Zhang estimated the amount of hot money inflow at 88 billion U.S. dollars from the second quarter.
Analysts normally calculate hot money by deducting foreign direct investment and a trade surplus from the country's foreign exchange reserve increase.