An employee at a bank counter in Nantong, East China's Jiangsu province, counts renminbi and dollars. [Photo/China Daily]

The rising yuan has reduced the expenditures of Chinese tourists and students abroad but has lowered export enterprises' profit margin.

The fact that US Federal Reserve Chairwoman Janet Yellen stressed the importance of only financial supervision, without mentioning monetary policy, at a Fed meeting last week might have put more downward pressure on the dollar. But the yuan has been appreciating for more than one year also because of the continuous improvement in China's economic fundamentals－for instance, stabilizing macroeconomic growth and increasing profit margin of industrial enterprises.

Besides, the financial supervisory departments' successful preventive and risk control measures to rein in several "gray rhinos"－or obvious dangers that are often ignored such as shadow banking, illegal fund raising and capital outflow－have also played a role in the yuan's appreciation. "Gray rhinos" undermine China's efforts to restructure the economy, and hinder the development of the real economy.

Since the supervisory measures for the banking, securities and insurance sectors have regulated the development of the financial industry, financial agencies have shifted their focus to meeting the needs of the real economy.

Although after the large-scale capital outflow was checked, China's foreign exchange reserves and the yuan's exchange rate both recovered steadily, that does not mean the risks have disappeared.

As the Fed is likely to continue raising the interest rate, the downward pressure on the yuan will build up again and prompt some of the "gray rhinos" to make a comeback. To prevent that from happening, the financial market should continue to help the real economy maintain healthy growth, which in turn will stabilize the yuan's exchange rate in the long run.

- BEIJING YOUTH DAILY