(Bloomberg) -- A rapid appreciation of the yuan against the U.S. dollar probably won’t last, according to a former Chinese central bank official, calling the trade “overbought.”

The rise in the yuan suggests short-term speculation, Sheng Songcheng, former director of the central bank’s statistics and analysis department, said in an interview with the official Xinhua News Agency.

China should prevent huge short-term inflows, which could push up the exchange rate of the Chinese currency, hurt competitiveness of exporters and affect independent operations of China’s financial market and monetary policy, he said.

With China’s economy rebounding from the pandemic and foreign funds piling into its equity and bond markets, the yuan has surged to the strongest level since May 2018 versus the dollar. It has risen this year against all but six of the 31 major currencies tracked by Bloomberg, and is Asia’s best performer.

Yuan’s Rally Draws Subtle Signal From PBOC Over Pace of Gains

The Chinese currency can’t be used to boost exports or offset the impact of surging commodity prices, the People’s Bank of China said on Thursday.

The rapid appreciation would instead hurt exporters’ interests, especially smaller ones and China has “enough policy tools” to stabilize the yuan and balance cross-border inflows, Sheng said.

The PBOC will properly guide expectations on the yuan, and the exchange rate will continue to be decided by market supply and demand, as well as changes in global financial markets, Sheng was cited as saying.

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