(Yicai) Jan. 11 -- The Chinese yuan weakened close to 7.2 against the greenback as the US dollar index swung above 102 again amid rising global aversion to risk.

The onshore yuan stood at 7.1628 as of 6 p.m. today, while the offshore rate was 7.1721, and the US dollar index hovered around 102.38.

The dollar has advanced this month after the yuan strengthened past 7.1 in December, even touching 7.0865 at one point. China's economic data was weaker than expected last month, which also weighed on market sentiment.

Last week, market expectations that the US Federal Reserve would cut interest rates were somewhat shaken amid an uptick in risk aversion, and the US dollar index rebounded to as high as 102.77 from 100.60 at the end of last year.

US economic resilience has made the market think that bets on rate cuts are too extreme, a forex trader at a foreign bank told Yicai.

The gap between the cost of money in China and in the United States has again widened to 1.5 percentage points from a low of around 1.3 percentage points in late December.

Foreign banks said that more sustained currency appreciation would require more convincing economic growth in China and improving prospects across asset markets. If the spread between China and US rates remains wide, any rebound in the yuan may be limited.

UBS Investment Bank was expecting the dollar to weaken this year, with the exchange rate moving toward 7 versus the yuan, according to Wang Tao, its head of Asian economic research. But if the dollar strengthens again in the first half and China's economic performance is lower than expected, that could jump back to 7.3, he said.

Lower borrowing costs in China will be key to the exchange rate. Analysts increasingly predict that the People's Bank of China will cut rates. Nomura expects the PBOC to pare the rate for open market operations by 15 bips in January and the medium-term lending facility rate by the same amount in April. It could also trim the reserve requirement ratio by 25 bips in the first half.

Editor: Emmi Laine