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Beijing, Jan.14 (Xinhua) -- China's currency, the yuan, hit a new high against the U.S. dollar on Monday, smashing the 7.26 mark to reach a central parity rate of 7.2566 yuan to one dollar.

The yuan, also known as the Renminbi, went up 106 basis points from Friday, the previous trading day.

This was the fifth time that the Chinese currency hit a new high against the U.S. dollar since the beginning of this year.

The yuan rose 6.9 percent against the dollar last year and has appreciated against the greenback by more than 12 percent since a new currency regime was imposed in July 2005 to discontinue the local currency's peg to the dollar.

Observers here said the yuan's rise would help China reduce its massive trade surplus, mop up excess liquidity and curb inflation.

China's trade surplus soared 47.7 percent last year to 262.2 billion U.S. dollars over the previous year. But the growth rate was 21.7 percentage points lower than the 69.4 percent for the first three months of 2007.

On Monday, the Renminbi gained 34 basis points against the unified European currency to 10.7452 yuan to one euro, while it lost 402 basis points against the Japanese currency to 6.6645 yuan to 100 Japanese yen.