China's currency, the yuan, was set to trade at 6.9837 yuan against the US dollar on Wednesday, a new high since the government unpegged it from the dollar in 2005.

The yuan has risen almost 4.6 percent against the dollar so far this year.

Market analysts attributed the rise to the continuing weakening of the dollar, led by a fall in confidence in the US currency and sell-off activity.

China ended the currency's peg to the dollar in July 2005, and since then the yuan's reference rate has been set against a currency basket that also includes the euro, yen, won and British pound.

The value of the Chinese currency stayed above eight to the dollar for many years before the 2005 regime reform. The yuan broke the 8-yuan threshold on May 15, 2006, and the 7-yuan mark on April 10 this year.