The renminbi has appreciated sharply over the past several years, exports are sagging, and the risk of deflation is growing. Under these circumstances, many suggest that a reversal in Chinese currency policy to weaken the renminbi is the most logical course. That would be a serious mistake.

European quantitative easing policy lead to the depreciation of the RMB exchange rate, but this depreciation is being carefully and intentionally observed by China’s central bank to observe the actual impact on the Chinese economy. A more flexible and internationalized RMB will be better to guard against depreciation.

China’s Central Bank is assessing changes in its international monetary policy in the following areas: RMB internationalization, becoming less dependent on U.S. Federal Reserve monetary adjustments, and containing the arbitrage of foreign speculative investment. With a major focus on the dispossession “outstanding funds for foreign investment,” the RMB is expected to experience moderate depreciation or fluctuation.

Since the start of the global financial crisis and the emergence of regional trade alliances in the global economy, “a currency swap network” has emerged in financial and monetary fields.

After the Renminbi depreciated for five consecutive months, the market has again seen signs of a pick-up. Some analysts believe the unusual change in RMB exchange rate means the RMB has stopped depreciating and begun returning onto the track of appreciation.

The RMB exchange rate should gradually reform with less government interference, writes Yi Xianrong.

In the future, Americans may not worry about the Yuan being undervalued, but will rather worry that a rapidly appreciated Yuan may erode the dollar’s supremacy and thus share the benefits enjoyed by the traditional international reserve currency, writes Ding Yifan.

In late February, the gradual appreciation of the renminbi was interrupted by a 1% depreciation. The resulting international outcry obscured a troubling feature of China’s exchange-rate policy: the tendency for sporadic renminbi appreciation (even small movements) to trigger speculative inflows of “hot” money.

Recent fluctuations in the Chinese yuan have given way to far-flung fears that the Chinese economy is faltering. However, Michael Justin Lee explains that the yuan’s fall against the U.S. Dollar was engineered by the People’s Bank of China and was necessary to reduce hot money the Chinese economy slows.

Although in 2014, it appears China will be adhering to a “prudent” monetary policy and working to balance its finances, the world’s number two economy will still face considerable challenges, such as rising credit and an appreciating currency.