The yuan has fallen against the US dollar for five consecutive trading days, weakening by 13 basis points to 6.1189 against the greenback yesterday.

Over the past trading days the yuan has fallen 136 points �� dropping 20 basis points on Tuesday, [Hong Kong Company Formation, Incorporation, Business Registration]30 points on Wednesday, 43 points on Thursday and 30 points on Friday, according to the China Foreign Exchange Trading System.

Economists predict the depreciation may signal a change in China's exchange rate policy with increased two-way volatility ahead.

The yuan depreciation against the dollar is due to a combination of an exchange rate fix and concerns over China's growth outlook, they said.

The yuan has dropped by over 200 basis points against the dollar this year. In China's foreign exchange spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate on each trading day.

The yuan started rising against the dollar from 8.11 in July 2005 when China reformed its exchange rate mechanism. Its appreciation quickened in 2013 and its value rose 3 percent, compared with 0.25 percent in 2012.

In the past few days, both the daily yuan fixing against the dollar and the spot rate have weakened, causing a market stir.

It is somewhat surprising given the stronger-than-expected January export growth and strong foreign exchange inflows so far this year, said Wang Tao, chief China economist at UBS.

China's January exports surprised the market with a 10.6-percent rise year on year, [Hong Kong Company Formation|Hong Kong Company Registration]exceeding market expectations of below 2 percent.

Until recently, the yuan has risen steadily against the dollar, and with little volatility, Wang said.

This is in sharp contrast with other emerging markets and key Asian currencies, most of which have depreciated significantly.

As a result, China's trade-weighted exchange rate against a basket of its major trading partners' currencies has risen by almost 20 percent in real terms since 2010 and by above 10 percent in 2013, she said.

The impact of yuan appreciation in 2013 is set to be felt in 2014, limiting the strength of China's export recovery this year, leading Want to say the era of steady yuan appreciation may be drawing ending.

"The shift away from the previous steady pace of appreciation could unwind ��hot money' inflows," she said.

This will not necessarily lead to a credit tightening, but it does pose challenges for liquidity management by the People's Bank of China, she added.

Wang Jun, senior foreign exchange strategist with HSBC, said the PBOC has been fixing the exchange rate between the dollar and the yuan higher after the Chinese New Year holiday.

"This suggests that the central bank wants to take advantage of the relative calmness in the external market to reduce (yuan) appreciation expectations," Wang Jun said in a research note.