China's currency posted its biggest loss in more than a month yesterday, following comments by the central bank governor that the pace of the yuan's appreciation was "appropriate."

The statement by bank chief Zhou Xiaochuan dampened expectations for faster gains.

Analysts said the yuan, which is forecast to continue to rise over the long term, may face mild corrections in the near term after blistering gains in the past few weeks.

The yuan settled yesterday to 7.7570 against the US dollar, easing 0.12 percent from 7.7476 on Friday. The drop was the biggest since January 8 when the yuan fell 0.16 percent.

"Yesterday's loss was led by Zhou's remarks at the G-7 meeting that the pace of gains was appropriate," said Jin Di, a trader at the Bank of China, referring to a meeting in Germany of the Group of Seven industrialized nations.

Jin expects the yuan to hover around 7.75 against the greenback in the next few days, as Zhou's comment suggests that the government is not likely to allow the currency to accelerate.

The yuan has set 11 new highs since the beginning of the year.

It has climbed 6.6 percent since July 2005 when China scrapped its long-standing peg of 8.28 to the greenback and matched the yuan to a basket of foreign currencies. It is allowed to swing within a daily trading band of 0.3 percent.

Zhou said in Germany on Friday that the yuan's current "pace of appreciation is suitable" and that exchange rate flexibility is being increased according to China's own plans and its economic ability.

The G-7 nations repeated their call for the Chinese government to allow greater flexibility in the yuan because of concerns over a rising trade surplus.

The country's trade surplus, driven by overseas sales, reached US$15.9 billion in January following a US$177.5 billion gap last year, the Ministry of Commerce said yesterday.

The huge imbalance has flooded the country's banking system with cash and raised optimism for the yuan to appreciate faster.