The yuan's real effective exchange rate (REER), an indicator that is adjusted for the effects of inflation, rose by 0.83 percent month-on-month to 119.65 in September, China Business News reported Monday.

But the currency's nominal effective exchange rate (NEER) dropped for the third month in a row to 113.81, down 0.27 percent month-on-month.

The contrasting shifts indicate the widening gap between inflation rates in China and its western trading partners.

The recent acceleration in the appreciation of the yuan is taking place against the backdrop of a weaker dollar and the strengthening of the yuan against a basket of currencies, Standard Chartered's chief economist Stephen Green said in a recent report. According to Green, the yuan's NEER will increase in the coming months and will rise significantly when the dollar recovers in 2011.

China's business press carried the story above on Monday. China.org.cn has not checked the stories and does not vouch for their accuracy.