The yuan is expected to depreciate modestly against the dollar this year, after the real effective exchange rate of the renminbi recorded the biggest gain last year since the start of the financial crisis.

That's the key point in the annual exchange rate index compiled by Shanghai-based Fudan University.

The yuan rose 2.72 percent against the dollar in 2013, while the Chinese currency's real effective exchange rate climbed 8.38 percent year-on-year, said Chen Xuebin, associate dean of Fudan University's Institute for Financial Studies.

"It marks the largest appreciation since 2008, when the real effective exchange rate rose 10.67 percent," Chen said.

A real effective exchange rate is a weighted average of the values of various foreign currencies, adjusted for inflation. It's viewed as the best way to gauge the purchasing power of a country's currency in comparison with its trading partners' currencies.

Fudan uses a basket of 24 currencies, including the euro, the dollar, the yen, the Malaysian ringgit and the Thai baht.

While the country has adopted a floating exchange rate with reference to a basket of currencies, the Chinese central bank effectively pegged the yuan against the dollar in 2008 to help get the country through the worst of the global financial crisis.

That in part explains the rise of the yuan, as the US economy revived more quickly than expected.

But other factors, including a mild export rebound, the gradual phasing out of US quantitative easing and the low recovery of the eurozone, also accounted for the yuan's appreciation in 2013, Chen noted.

China's trade surplus hit a record high in November, pushing up the renminbi. The Chinese currency's value is also being pushed up by speculative inflows attracted by higher interest rates.

The yen contributed the most to the yuan's appreciation last year, the result of Japan's zero interest rate policy. Europe's steady recovery counterbalanced the surge, with the yuan depreciating against the euro in the second half of 2013.

Chen forecast the yuan will weaken 1 to 2 percent against the dollar in 2014, with the US currency supported by improving economic conditions.

Chen said the yuan should be pegged to a basket of currencies instead of just the dollar, and the market should allow volatility in either direction.

"Wider fluctuations will help lower expectations for the yuan's appreciation, improve China's system for setting exchange rates and stabilize the currency's real effective exchange rate," he said.

A Deutsche Bank AG report in December suggested that the yuan will appreciate against the dollar by 2 to 3 percent in 2014.

Such predictions are based on the assumption that the world's second-biggest economy will continue growing by 7.5 percent, and continued internationalization will keep the currency strong, said Ye Bingnan, a macroeconomic researcher from Bank of China Ltd.

The yuan rose last year to 6.09 per dollar, compared with 6.23 at the end of 2012.

The central bank will gradually widen the yuan's trading band to help make the currency more flexible and market-driven, according to People's Bank of China Governor Zhou Xiaochuan. He made the comment in a Communist Party blueprint published in November.

To that end, the PBOC will "basically" end regular intervention in the currency market, Zhou wrote.

The yuan has appreciated 36.7 percent against the dollar since exchange rate reform began in 2005.

Before that, the yuan's value stayed relatively fixed to the dollar, and the central bank intervened to keep it stable.