File photo shows the Chinese currency renminbi.(Photo: Xinhua)

The offshore yuan has continued to appreciate against the US dollar this month, with this trend intensifying recently, reflecting growing expectations for a sustained improvement in China's economy, Chinese experts said.

Over the past three trading days, the offshore yuan has risen by a cumulative 624 basis points, or 0.87 percent. While it was up 0.21 percent as of press time on Wednesday, it still remains below the 7.28 level recorded at the end of July.

Experts said that with the strengthening outlook for the Chinese economy and increasing expectations of further interest rate cuts by the US Federal Reserve, the yuan is likely to keep getting stronger against the dollar in the second half of the year.

The stronger yuan shows that amid the ongoing escalation of international geopolitical risks and increased volatility in world financial markets, global capital increasingly views Chinese bonds as a safe-haven asset, and the growing demand for yuan-denominated assets supports the appreciation of the yuan, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Wednesday.

In July, overseas investors increased their holdings by 228.3 billion yuan ($32 billion) in bonds, which reversed the "one-sided view" of some overseas investment institutions on outflows from China's capital market, according to media reports.

The yuan's gains are being bolstered by China's economic activity, which has remained relatively smooth and stable, Xi said.

The yuan's continuous internationalization also underpins its strength against the dollar, Xi said.

The recent rapid appreciation of the yuan was also directly influenced by the performance of the US dollar, Li Chang'an, a professor at the Academy of China Open Economy Studies of the University of International Business and Economics in Beijing, told the Global Times on Wednesday, indicating that "expectations of an interest rate cut by the [US] Federal Reserve are significant."

If the Fed cuts rates, it would lead to a decrease in the yields of US dollar assets, reducing the market's demand for dollars. As the dollar falls, the yuan rises, Li said, adding that dovish signals about rate cuts could provide ongoing support for a steady appreciation of the yuan.

With the potential for further declines in the dollar and expectations for an improved Chinese economy with more policy support, the yuan has room to continue appreciating against the dollar, experts said.