The yuan traded at the strong end of its permitted trading band yesterday ahead of the Communist Party's 18th congress and the US presidential election, but analysts said the currency's strength was not sustainable. The yuan touched 6.2447 per US dollar in intra-day trading in Shanghai, exceeding the central bank's reference rate by 1 per cent. The spot rate of the yuan against the Hong Kong dollar was down 0.06 per cent at HK$1.2402. The rate hit a record high of HK$1.25 at the end of last month. The yuan exchange rate is allowed to rise or fall 1 per cent from the midpoint rate set by the central bank every day. This was set at 6.3078 a dollar yesterday, 0.01 per cent higher than the midpoint rate of Monday. The currency normally stays within the trading band. The currency closed at 6.2456 against the US dollar in Shanghai, little changed from Monday's 6.2454, according to the China Foreign Exchange Trade System. The yuan has hit the upper limit of the daily trading band a couple of times over the past two weeks, driven by the inflow of hot money, said Zhang Zhiwei, a China economist at Japanese bank Nomura. The US presidential election and the 18th national congress, which starts tomorrow, were also behind the strong yuan exchange rate, Zhang said. "It seems that the mainland is more willing to allow a rise in the yuan ahead of the US presidential election," he said. Some economists said the recent gain in the yuan could be China's pre-emptive move to ward off criticism that the country is a currency manipulator ahead of the US election. The yuan reached 6.2371 against the dollar on October 29, the highest level since the government unified the market and official exchange rates at the end of 1993. The yuan exchange rate has fluctuated this year but is little changed to 6.294 a dollar at the end of last year. China also has more room to ease its monetary policy ahead of the 18th national congress as the country's economy sees signs of a rebound, Zhang said. The stock market and property markets have seen an inflow of money, he said. "We have seen an influx of capital into Asian markets, such as Hong Kong, following the US' QE3." The US Federal Reserve announced a third round of quantitative easing in September. But analysts said the yuan's strength will not be sustainable because the impact of QE3 will be limited. "The yuan exchange rate is close to an equilibrium level," Beijing-based brokerage China International Capital Corp (CICC) said in a research report. The central bank is unlikely to tolerate a significant appreciation in the yuan, the report said. Nomura's Zhang said the yuan would even face depreciation pressure in the medium and long term as he expects China to experience a current account deficit in 2014 owing to worsening exports. There is little room for the rise in the yuan next year, he said. CICC expects the yuan to reach 6.27 against the US dollar at the end of this year and the exchange rate to remain flat over next year.