A clerk at an foreign currency exchange desk at a hotel shows Chinese yuan banknotes in this July 22, 2005 file photo taken in Shanghai, China. China's currency rose to a fresh high against the US dollar on Monday, Nov. 27, 2006 as the central bank set its rate at 7.8402 yuan per dollar, the highest level since the current exchange system was set up in July 2005. [Reuters]

SHANGHAI -- China's currency rose to a fresh high against the US dollar on Monday, as the central bank set its rate at 7.8402 yuan per dollar, the highest level since the current exchange system was set up in July 2005.

Trading was light as dealers tried to figure out why the People's Bank of China had shifted the official parity rate -- a weighted average of prices given by market makers, excluding the highest and lowest offers -- to well above 7.8500.

China's central bank does not comment on its currency market activities.

China allows the dollar-yuan rate to move no more than 0.3 percent above or below the daily parity rate each day. Other currency pairs -- the yuan's values against the Japanese yen, Hong Kong dollar, euro and British pound -- are allowed to move within 3 percent of the parity rate each day.

Monday's official rate compared with an over-the-counter rate of 7.8525 yuan per dollar late Friday.

Beijing has allowed the yuan's value to rise by about 3.33 percent since it revalued the currency by 2.1 percent in July 2005, ending its longtime peg against the US dollar.

Washington has been prodding Beijing to let its currency float more freely with market forces, arguing that controls keep the yuan undervalued, giving Chinese exporters a price advantage overseas and adding to China's trade surplus with the US, which the US side put it at US$202 billion last year.

US President George W. Bush faces growing pressure to counter that trend following the opposition Democratic Party's capture of Congress in elections earlier this month.

American officials are expected to raise the currency issue in a top-level US mission to Beijing next month, led by US Treasury Secretary Henry Paulson and US Commerce Secretary Carlos Guiterrez. In an unusual move, US Federal Reserve Chairman Ben Bernanke is expected to accompany the delegation.

China says it plans to allow market forces to play an increasingly important role in determining the yuan's value but that such changes must come gradually to allow Chinese financial institutions and manufacturers time to adapt.

Overall, the yuan has gained 5.1 percent in value against the dollar since before its revaluation in July 2005.