The yuan, the Chinese currency, has appreciated more than 20 percent against the greenback since the country dropped its peg to the U.S. dollar with a one-off two-percent revaluation exactly three years ago.

The central parity rate of the yuan, or renminbi (RMB), was set at 6.8271 yuan against the dollar on Monday after peaking at 6.8128 last week, according to the China Foreign Exchange Trading System.

Both represented a 21 percent rise against the dollar compared to 8.2765 yuan per dollar before the de-pegging, announced on July 21, 2005.

Let's see what's ahead as well as the route of the yuan's appreciation over the past three years and its impact on the economy and normal people.

To rise, or not to

Many critics from outside China said the government had kept the currency undervalued by at least 20 percent to give its exporters an advantage in the world market, when the country took the move .

With the yuan now nearing 6.8 yuan against 1 dollar, analysts started to ponder on the equilibrium prices of the yuan, especially as the national economy slowed in the first half, and anticipation for the yuan's continued bilateral appreciation began to ebb.

Many believed the yuan would continue its upward motion in the near term, but there may be expectations for its depreciation as early as the end of this year.

They said the yuan's exchange rate was gradually approaching its equilibrium and could eventually become a truly flexible currency moving in both directions.

"Market expectations for the yuan's further appreciation have apparently eased," said Liu Dongliang, a China Merchants Bank analyst.

He noted the five-year future prices for the yuan already indicated a depreciation from the three-year and four-year prices on the forward market.

However, "no one can tell the exact equilibrium price," said Lu Zhengwei, chief economist of the Fujian Province-based Industrial Bank.

"Theoretically speaking, one can tell from figures like international payments to see whether the exchange rate reflects the true value of a currency," Liu said. But the exact equilibrium was hard to trace, and it could be a dynamic equilibrium instead of a static one, he added.

Ha Jimin, China International Capital Corporation chief economist, believed conditions of the equilibrium could be found in trade figures.

He said the equilibrium would strike when trade came to account for about 3 percent of the country's gross domestic product (GDP). China's trade, at present, contributed about 5 percent of the GDP.

He said the yuan would continue to rise but at a slower pace in the second half; its depreciation might emerge when the dollar reversed its sliding trend in the first half of next year at the earliest.

Lu, however, said the equilibrium might come at an earlier time, or at the end of this year, as the slowing economy may dampen market expectations.

The latest statistics showed China's GDP rose 10.4 percent in the first half over the same period last year, 1.8 percentage points lower than the first half last year.

Both Lu and Ha put the annual rise of the yuan at around 10 percent this year, or at around 6.6 yuan per dollar. The currency had so far risen nearly 7 percent since the end of last year.