The yuan is expected to rise this week after the central bank said on Friday that it will use exchange rate and interest rates to fight inflation.

The yuan ended at 7.1418 against the United States dollar on Friday, up from 7.1825 the week previously. The currency has gained 2.3 percent this year.

The People's Bank of China said on Friday it will make the yuan more flexible and use interest rates to curb inflation that's projected to remain "high" in the first half of this year.

A more valuable yuan will also help temper import prices.

China will "boost the exchange rate's role in adjusting the balance of payments and in curbing inflation," the central bank said.

China's inflation jumped 7.1 percent in January to hit the highest rate in more than 11 years.

The worst snowstorm in half a century and seasonal demand for the Spring Festival helped drive up prices.

Goldman Sachs raised its inflation forecast to 6.8 percent from 4.5 percent this year, and expects the yuan to rise by 12 percent against the US dollar in 2008.

(Shanghai Daily, February 25, 2008)