BEIJING -- The Chinese yuan strengthened to a record high against the US dollar Friday, the central parity rate reaching 6.5896, the second straight day it has been set below 6.6 per dollar.

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The exchange rate of the currency, also known as the renminbi (RMB), was set 101 basis points lower than Thursday's 6.5997, according to the China Foreign Exchange Trading System.

The rate has risen by more than 3 percent since the country's central bank announced in June 2010 it would further reform the yuan exchange rate formation mechanism to improve its flexibility.

On China's foreign exchange spot market, the yuan can rise or fall 0.5 percent from the central parity rate each trading day.

The central parity rate of the RMB against the US dollar is based on the weighted average of the enquired prices of all market makers before the opening of the market each business day.

Analysts attributed the yuan's strong performance to the fundamentals of the Chinese economy and also short-term factors.

Ba Shusong of the Development Research Center of the State Council, China's cabinet, said the rise of the yuan reflected the country's need to rein in inflationary pressures.