Despite depreciation in the first quarter, the Chinese yuan is expected to appreciate moderately against the U.S. dollar in coming months. The yuan, or renminbi, should "appreciate moderately" in next six to 12 months, said Zhou Hongli, analyst with Development Bank of Singapore. The yuan retreated more than 2.6 percent against the U.S. dollar in the first three months, after gaining 2.9 percent last year. "The yuan depreciated in the first quarter with a string of lukewarm economic data and news of bond defaults by two companies in East China -- Shanghai Chaori Solar Energy Science & Technology Co. and Zhejiang Xingrun Real Estate Co., but Chinese economy is expected to stabilize and pick up steam in the second quarter. This will be good for the yuan," said Liu Dongliang, analyst with China Merchants Bank. There is an obvious differential of deposit interest rates offered by Chinese and U.S. banks, which still makes deposits in Chinese banks an attractive investment channel, Zhou added.