On the over-the-counter market, the dollar was at CNY6.5824 around 0830 GMT, down from CNY6.5829 late Tuesday. It traded between CNY6.5817, the lowest intraday level since the yuan began trading regularly in 1994, and CNY6.5880.
At CNY6.5824 to the dollar, the yuan had risen 3.7% since mid-June, when China pledged to increase its currency's trading flexibility and effectively ended a two-year-long peg to the dollar.
The yuan rose after the People's Bank of China set the dollar-yuan central parity, a daily reference rate, at a fresh low of 6.5885, breaking the previous record of 6.5891 set Tuesday.
Dealers said the yuan's rise coincides with President Hu Jintao's visit to the U.S. that will end Friday, suggesting the gains are the result of a goodwill gesture by Beijing. U.S. President Barack Obama and Hu are scheduled to meet in Washington, where the leaders will likely discuss the currency issue and Hu could face criticism over Beijing's currency policy.
"The dollar-yuan should stay low, hovering around 6.5800 this week while President Hu is in the U.S., as the market is expecting comments on the value of the yuan from both sides," a foreign bank trader based in Shanghai said.
U.S. Treasury Secretary Timothy Geithner said last week that although China's currency reform since June had seen an annualized yuan appreciation-rate of around 6% to 7%, the pace should be much closer to the 10%-a-year rate seen earlier in the decade.
However, the decline in the daily dollar-yuan fixing has slowed, indicating Beijing may be looking to put brakes on the yuan's gains, dealers said.
"The PBOC won't guide the yuan much higher this week, but it still wants to make headlines that the yuan is rising to record highs," a European bank trader based in Shanghai said.
Offshore, one-year dollar-yuan nondeliverable forwards rose to 6.4570/6.4620 from 6.4520/6.4540 late Tuesday.
-By Jean Yung, Dow Jones Newswires; 8621 6120-1200; firstname.lastname@example.org