Higher oil prices, domestic inflation and a huge trade surplus are all factors behind the recent renminbi appreciation, said China's central bank chief Zhou Xiaochuan while attending the Bank for International Settlements Conference in Basel, Switzerland yesterday.

During the conference Zhou said that China's trade surplus growth has slowed its pace but the figure is still large. He asserted that the central bank is also closely watching the fluctuations of international crude prices.

The supply and demand in the domestic foreign exchange market is also contributing to the local currency's recent rise, according to the central bank governor.

Some domestic financial institutions have been dumping their foreign exchange holdings recently, contributing to yuan's appreciation, Zhou explained.

Many research institutes have upped their expectations of yuan appreciation.

JP Morgan Chase& Co denied the possibility of one-off large appreciation in its report but projected the yuan to rise 10 percent against the US dollar with a wider trading band this year.

Standard Chartered Bank projected the appreciation to be 9 percent this year.

For more details, please read the full story in Chinese (http://www.china-cbn.com/s/n/000002/20080108/000000086892.shtml).

(China.org.cn January 8, 2008)