The yuan is expected to remain little changed against the US dollar this week as China pledges to maintain smooth economic recovery, according to market watchers.

The local currency remained almost unchanged against the US dollar last week and ended at 6.8271 last Friday, according to the China Foreign Exchange Trade System. The central bank set the same mid-point by the end of the previous week.

"China's economy will grow by at least 8 percent this year, and an early interest rate lift will spur an influx of speculative money," Xia Bin, head of the financial institute of the Development Research Center, a Cabinet think tank, was quoted by China Securities Journal as saying on Saturday.

He warned that if China raised interest rates before the United States did, it may attract inflows of "hot money" while the Consumer Price Index was still within a control.

China's GDP grew 10.7 percent in the fourth quarter last year and whole year growth in 2009 reached 8.7 percent, exceeding the 8 percent target set at the beginning of the previous year, the National Statistics Bureau said last Thursday.

The central bank's raising of banks' reserve ratio by 0.5 percentage points the week before last has spurred speculation there will be an increase in interest rates very soon.

Standard Chartered economists said last week that the yuan will rise to about 6.70 by the end of 2010.