THE yuan strengthened to a record high against the US dollar yesterday, after the central bank set the official fixing rate at the strongest in 19 years, signaling the government's intention to allow the currency to rise further.

Spot yuan closed at 6.1356 against the dollar yesterday from 6.1389 at Monday's close. The yuan hit 6.1305 in the afternoon, its strongest since China unified the official and market exchange rates in late 1993. The rate also topped its previous historical record of 6.1307 set on May 9.

The strengthening occurred after the People's Bank of China fixed the central parity rate at 6.1911, an all-time high. The yuan can rise or fall 1 percent daily from the central parity rate.

The PBOC's central parity rate has allowed the yuan to appreciate over 1.2 percent since April 1.

Economists have attributed the yuan's recent appreciation to an inflow of foreign capital disguised as trade settlement.