CHINA’S central bank is asking financial institutions and enterprises to step up exchange-rate risk management and refrain from making one-way bet on the yuan after the currency climbed to a six-year high against a basket of peers.

Volatility of the Chinese currency may increase in the future as overseas central banks have started adjusting their monetary policies, with two-way fluctuation of the yuan rate expected to be “the norm,” according to a statement posted on the website of the People’s Bank of China (PBOC).

“In the future, the renminbi [yuan] exchange rate may either appreciate or depreciate,” said the statement, which is about a meeting held this week by China FX Committee, an industry body whose members include representatives from regulatory bodies and financial institutions. PBOC Vice Governor Liu Guoqiang also attended the meeting.

The warning came as the yuan advanced to its highest level since 2015 against a basket of trading partners’ currencies earlier this week following the dollar’s surge. The rally is fueled by China’s trade surplus and prospects of cuts in U.S. tariffs, analysts have said.

The PBOC set the daily yuan fixing rate at 6.3825 on Friday, roughly in line with the 6.3822 average estimate by analysts and traders surveyed by Bloomberg. Offshore yuan was little changed at 6.3840 as of 10:25 a.m. in Shanghai.

“The warnings from the FX regulator are something the market should take seriously,” said Zhou Hao, a senior emerging market economist at Commerzbank AG. “Under any circumstance, the risk of the one-way market is that the unwinding, once it happens, could be wild.”

Qi Gao, Asia FX strategist at Scotiabank, wrote in a note that China’s central bank will set the yuan reference rate against the greenback “with an upward bias” if needed to prevent any one-sided speculation on the yuan appreciation. That said, he maintains his forecast that the U.S. dollar/yuan pair could move toward 6.35.

Shenzhen-based China Merchants Securities said in a research note that the yuan appreciation is bringing much more benefits to the Chinese economy than detriments and the foreign exchange market players should prepare for mid- to long-term yuan appreciation as the U.S. dollar may still weaken. (SD-Agencies)