The value of the Renminbi (RMB) against the U.S. dollar hit a new high on Monday, with the central parity rate at 7.8402 yuan to one dollar, breaking the 7.85 mark.

This signifies that RMB value has risen by 5.31 percent since July 21, 2005, when the Chinese government launched the reform of the exchange rate system to allow the yuan to float against the U.S. dollar within a daily 0.3 percent band from the official central parity rate.

The appreciation followed previous records on Nov. 9 when the central parity rate hit 7.8697, breaking the 7.87 mark, and Nov. 23 when it was 7.8596, breaking the 7.86 mark.

The exchange rate was set at about 8.27 yuan per U.S. dollar before the reform.

The yuan's appreciation is attributed to the continuous slump of the U.S. dollar and expectation for an interest rate drop in the United States, said analysts.

China's soaring foreign exchange reserves and the rocketing trade surplus are also considered important factors that pushed the yuan's value to new highs.

China's foreign exchange reserves were expected to reach one trillion U.S. dollars after climbing to 987.9 billion U.S. dollars by the end of September, with a monthly average increase of 18.7 billion U.S. dollars for the first nine months.

U.S. critics have argued that China's currency is undervalued by as much as 40 percent, giving Chinese goods price advantages and resulting in a mounting trade deficit for the United States.

However, Tang Xu, director general of the research department of China's central bank, said the current floating band of the yuan's exchange rate is wide enough.

Greater flexibility, if exercised too early, may seriously harm the economy in the absence of a sound financial system and a proper economic structure, Wu Xiaoling, deputy governor of the People's Bank of China, said at a recent forum.

The Chinese government must fully explore to what extent the flexibility should be, while enterprises should be given adequate time to adapt to the flexible interest rates and exchange rates, said Wu.

The Chinese government will not immediately allow the yuan's exchange rate to grow more flexible though the appreciation is expected to continue in the short run, said analysts.