The yuan gained to the strongest since a US dollar link ended in 2005 after the Chinese central bank Governor Zhou Xiaochuan said the currency "will have to rise" because a weakening greenback will drive up commodity prices.

The yuan will extend its advance through December, taking gains since the peg was scrapped almost three years ago to 24 percent, according to a Bloomberg News survey of analysts and economists, as the nation seeks to curb inflation. Chinese Vice Premier Wang Qishan said on Tuesday that the central government is pushing ahead with currency reform after making "substantial" progress in narrowing the trade gap with the United States.

"The accelerating move in the spot market is a welcome development," said Emmanuel Ng, a currency strategist with Oversea-Chinese Banking Corp in Singapore. "Keeping imported inflation at bay remains important."

China's currency climbed 0.14 percent to 6.8821 per US dollar in Shanghai as of the 5:30pm close of trade yesterday, a sixth day of gains and compared with 6.8915 on Tuesday, according to the China Foreign Exchange Trade System. It touched 6.8809, the strongest since the decade-old peg system was scrapped in July 2005.

Zhou, who is in Annapolis, Maryland, the United States, for two days of talks with US Treasury Secretary Henry Paulson that ended yesterday, said emerging economies are "feeling the pinch" from a decline in the US dollar.

Bloomberg's survey shows the yuan will reach 6.65 by year-end, as the currency breached 6.9 for the first time on Tuesday.

Yuan appreciation has helped appease foreign criticism that China has kept the yuan artificially low, providing an unfair trade advantage to the nation's exporters. Speculators betting on further currency gains and a rising trade surplus have helped flood the economy with cash, boosting inflation, lending and investment.