China's yuan rose for the first time in three days, setting a new high against the US dollar after the country reformed its currency policy in July 2005.

The central parity rate of the yuan, or Renminbi (RMB), was set at 6.9238 yuan against the dollar on Friday, according to the China Foreign Exchange Trading System. The reference rate was up 156 basis points from Thursday.

The RMB has gained 5.5 percent against the dollar so far this year, compared with 6.9 percent last year.

The RMB fell over the past two days as the dollar rallied after the US Federal Reserve Chairman Ben Bernanke signaled end to rate cuts on Tuesday.

The dollar continued rising overnight as boosted by the better-than-expected US jobless claims in the week ended May 31, but reversed gains later after European Central Bank President Jean-Claude Trichet said a rate increase in July was possible.

Despite economic slow-down on weaker exports, Chinese authorities would continue to allow gradual appreciation of the yuan against the dollar to tame inflation, analysts said.

In a research report published Tuesday, The People's Bank of China rejected as "exaggeration" warnings that the nation's exports are set to drop sharply, leading to an economic hard landing.

"The pressures for broad-based price rises are still the biggest risk for the macro-economy," according to the report.