The exchange rate of the U.S. dollar against the Chinese currency, yuan, hit a record 1:6.8270 in Feb.2009.

China's currency, the yuan, breached the psychologically important barrier of eight yuan to the U.S. dolla r for more than one year, the central bank announced amid strong market expectations.

The central parity is based on a weighted average of enquired prices from all market makers, including major domestic banks, before the market opens each business day.

A State Administration of Foreign Exchange official, who asked to be unidentified, echoed Tan's remarks, saying that the yuan's depreciation below eight against the dollar is "in line with his foresight."

"But the rate might climb back above eight with changes of market factors," he told Xinhua.

Speaking of future yuan reforms, the official said market forces should be given full play in determining the currency's value.

On Thursday, Chinese Foreign Ministry Spokesman Liu Jianchao said China appreciates the newly-released U.S. current report that didn't list China as a currency manipulator.

He said the report, released by the U.S. Treasury Department on May 10, took note of China's efforts in boosting domestic demands, establishing a more flexible foreign exchange mechanism and financial reforms.

Encouraged by the report and the U.S. Federal Reserve decision to lift the benchmark short-term interest rate by a quarter-percentage point, which strengthened the dollar and the Chinese currency failed to gain much ground last week.

Han Fuling, a finance research fellow with Central University of Finance and Economics, said he believes that the appreciation of the yuan will bring more overseas funds into China's stock market, which continued last week's strong growth on Monday with major index closing at a new two-year high of 1,664.09 points, a rise of 3.82 percent from Friday's close.

China share prices have soared in recent weeks on institutional buying and improved confidence and optimism over a resumption of share offerings after a year-long break that saw new reforms put in place.

Overseas speculators, betting on a yuan rise, were buying heavily yuan-denominated assets including stocks in recent years. However, Han said fresh money inflows are "good news" for the stock market which have remained bearish for years.