The currency reached the highest since China ended a dollar link in 2005 as Robert Sinche, head of global currency strategy at Bank of America Corp. in New York, said China is ``still dealing with massive excess liquidity.'' Policy makers slowed the appreciation in April and the beginning of May, after the yuan posted the biggest quarterly gain since the peg ended.
The yuan rose 0.20 percent to 6.9597 per dollar in Shanghai as of 5:30 p.m., from 6.9735 yesterday, according to the China Foreign Exchange Trade System. The five-day gain was the longest since a seven-day advance ended March 20. The currency reached as high as 6.9566 versus the dollar.
China will increase the exchange rate's flexibility to curb consumer prices, the People's Bank of China said in its first-quarter monetary policy report last week. Inflation accelerated to 8.5 percent in April, near the highest in 11 years, from 8.3 percent in March.
The Chinese currency has been the second-best performer this quarter among the 10 most-traded Asian currencies outside Japan. It has gained 0.8 percent versus the dollar, while eight of the 10 currencies have dropped against the dollar.
Government bonds rose as a slump in China's stocks market slowed the pace of share sales.
The yield on the 3.56 percent treasury note due in April 2011 dropped 1 basis point to 4.15 percent, according to the China Interbank Bond Market. The price of the security climbed 0.03 per 100 yuan face amount to 99.64. A basis point is 0.01 percentage point.